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HMRC internal manual

Capital Allowances Manual

Plant and Machinery Allowances (PMA): hire purchase: plant and machinery provided by lessee


A lease may require the lessee to provide plant or machinery. If the lessee does that, the lessee may not be the owner of the plant or machinery. For example, the lease of a shop may require the lessee to provide a display case that becomes the property of the lessor along with the shop.

If a lessee carrying on a qualifying activity incurs capital expenditure on an asset:

  • whose provision is required by the lease;
  • that is not a fixture; and
  • that is not owned by the lessee;


then the lessee is treated as the owner of the asset while it is used for the qualifying activity. The lessee does not need to bring a disposal value to account when the lease ends.

If the lessee uses the plant until the lease ends and the lessor holds the lease in the course of a qualifying activity, the lessor has to bring a disposal value to account if there is a disposal event after the lease ends.


Henley rents a shop from Walsh, who lets it as part of an ordinary UK property business. The lease requires him to provide a showcase that becomes Walsh’s property. Henley provides the showcase and uses it until the lease ends. Walsh decides to turn the shop into a restaurant and sells the showcase. Walsh has to bring a disposal value to account in his UK property business.