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HMRC internal manual

Capital Allowances Manual

Plant & Machinery Allowances (PMA): Long-life assets: Airlines agreement - purchases before 1 July 2013

Note: CA23781 and 23782 apply only to aircraft purchased before 1 July 2013. CA23783 and 23784 apply to aircraft purchased on or after 1 July 2013.


There is an agreement between HMRC and the British Air Transport Association (BATA) on the application of the long-life asset rules to jet aircraft capable of a configuration of 60 or more seats and used primarily for the carriage of passengers or freight for profit (referred to below as “jet aircraft”) which make up the bulk of the aircraft operated by members of BATA. The agreement was made by the Large Business Service (LBS) and runs up until 31 December 2013

The LBS and BATA both recognise that the 25-year test is particularly difficult to apply to jet aircraft. From the evidence available, the LBS consider that the useful economic life of a current generation jet aircraft would normally be more than 25 years. BATA consider that the evidence shows that it would be less than 25 years. Both sides remain convinced of the rightness of their views but have been unable to persuade the other of the correctness of the inferences they sought to draw from the evidence available.

The agreement also takes other factors into account. BATA estimate that up to 50% of the cost of a jet aircraft can be made up of major components, which are not in themselves long-life and may be treated as separate assets. BATA estimate that only 39% by value of the original aircraft remains in existence at the end of its useful economic life.

Individual airlines may choose to enter into an arrangement with HMRC. The arrangement will be open to the parent company of the airline and will apply to all its subsidiary companies. It will apply to all jet aircraft acquired by the airline before 31 December 2008.

For jet aircraft which come within the arrangement, the total expenditure on the aircraft in its ready-for-service configuration will be treated as made up of two equal sums,

  • one of which is long-life and attracts allowances as special rate expenditure,
  • while the other is not long-life and attracts allowances at the normal rate for plant and machinery.


Treat the aircraft as 50% long-life and 50% normal-life assets. Disposal proceeds should be apportioned in the same ratio.

Under the arrangement, the airline also undertakes to inform HMRC of the details of any finance lease in respect of jet aircraft entered into up to 31 December 2013 within three months of so doing.

The arrangement will be open to lessors so that they too can have certainty in planning their transactions. In the case of finance lessors, an arrangement with an individual company, which does not apply to other members of the leasing group, may be accepted.

The details of the arrangement were contained in the text of formal agreements (one version for airlines, the other for lessors) and an explanatory statement agreed between the LBS offices dealing with the airlines and BATA. Copies of the agreements and explanatory statement are available from:

CTIAA (Technical)
Third floor
100 Parliament Street
London SW1A 2BQ