CA23167 | Plant and Machinery Allowance (PMA): First Year Allowance (FYA): Super-Deduction and Special Rate (SR) Allowance: Hire purchase and similar contracts

CAA01/S67, FA21/S9(8)

There is guidance for expenditure on the provision of plant and machinery under hire purchase and similar contracts at CA23300. FA21/S9(8) amends the conditions under which a contract is considered a hire purchase and similar contract for the purposes of claims to the super-deduction and SR allowance.

FA21/S9(8) only amends the conditions in CAA01/S67(1)(b). The remainder of CAA01/S67 is unaffected and continues to apply as set out in CA23300. For the purposes of the super-deduction and SR allowance, the condition in CAA01/S67(1)(b) is replaced with the following two conditions:

Condition A

Under the agreement plant or machinery is bailed (or in Scotland hired) to the person who incurs the expenditure in return for periodical payments by the person to whom they are bailed (or hired).

The term bailed (or hired) in this context means the relevant plant or machinery must be delivered to the company without transfer of ownership.

Condition B

Under the agreement the property in the plant or machinery will pass to the person to whom they are bailed (or hired) if the terms of the agreement are complied with and one or more of the following three events occur:

• the exercise of an option to purchase by that person

• the doing of another specified act by any party to the agreement

• the happening of another specified event.

The term property in this context means ownership of the relevant plant or machinery.