Please don't re-lease me

CHRIS LALLEMAND looks at property leases and the new plant and machinery rules.

TRADITIONALLY PROPERTY USERS have been able to obtain significant value by claiming capital allowances on plant and machinery included in properties provided that they have incurred the expenditure have a relevant interest in the property and a qualifying activity is being carried on. Some new property leases may be affected by a change introduced in Finance Act 2006 resulting in some of these allowances no longer being available to the landlord in respect of certain items of expenditure. Instead the landlord will only be taxable on the finance element of the lease rental applicable to the plant and machinery affected while the tenant or lessee will be able though not required to claim capital allowances and an interest deduction in place of a rental charge.

The new rules apply to...