70YB Long funding operating lease: extension of term of lease
(1) This section applies in any case where—
(a) a person is lessor or lessee under a long funding operating lease (the “existing lease”),
(b) an event occurs which has the effect of extending the term of the lease (whether by variation of the provisions of the lease, the grant or exercise of an option or in any other way), and
(c) the event is not one by reason of which, within the meaning of section 70YA, the accountancy classification of the lease as an operating lease changes in the relevant accounts.
(2) For this purpose an event has the effect of extending the term of the lease if it meets any of the following conditions—
(a) it has the effect of making a further period a non-cancellable period;
(b) it is the grant of an option to the lessee to continue to lease the plant or machinery for a further period, where it is reasonably certain at the time the option is granted that the lessee will exercise it;
(c) it is the exercise by the lessee of an option to continue to lease the plant or machinery for a further period;
(d) it does not fall within the preceding paragraphs, but it has the effect that the lessee will continue, or is reasonably certain to continue, to lease the plant or machinery for a further period.
For this purpose “further period” means a period falling wholly or partly after the end of the pre-existing term.
(3) The person is to be treated as if—
(a) the existing lease terminated at the end of the day before the effective date,
(b) another lease (the “new lease”) were entered into on the effective date, and
(c) the term of the new lease were the unexpired portion of the term of the existing lease, as extended.
(4) The person is also to be treated as if the effective date were the date of both—
(a) the inception of the new lease, and
(b) the commencement of the term of the new lease.
(5) The new lease is to be taken to be a long funding operating lease.
(6) For the purposes of this section the “effective date” is the earlier of—
(a) the day after the end of the pre-existing term of the existing lease;
(b) if the rentals payable are varied as a result of or otherwise in connection with the event, the date on which the variation takes effect.
(7) In this section—
“non-cancellable period” has the same meaning as in section 70YF (the “term” of a lease);
“pre-existing term”, in relation to a lease, means the term of the lease apart from the extension in question.
70YC Extension of term of lease that is not a long funding lease
(1) This section applies where—
(a) a person is lessor under a plant or machinery lease (the “existing lease”) that is not a long funding lease, and
(b) an event occurs which has the effect of extending the term of the lease (whether by variation of the provisions of the lease, the grant or exercise of an option or in any other way).
(2) Subsection (2) of section 70YB (events having the effect of extending the term of a lease) also has effect for the purposes of this section.
(3) Make the following assumptions—
(a) the existing lease terminates immediately before the effective date,
(b) another lease (the “new lease”) is entered into on the effective date,
(c) the term of the new lease is the portion of the term of the existing lease, as extended, that remains unexpired as at the effective date;
(d) the effective date is the date of both—
(i) the inception of the new lease, and
(ii) the commencement of the term of the new lease.
(4) If, on those assumptions, the new lease would be a long funding lease, the person is to be treated on those assumptions.
(5) If subsection (4) does not apply, then, for the purposes of any subsequent application of this section or section 70YD in the case of the existing lease, the term of the existing lease is to be taken to be the term as extended (or further extended).
(6) For the purposes of this section the “effective date” is the earlier of—
(a) the day after the end of the pre-existing term of the existing lease;
(b) if the rentals payable are varied as a result of or otherwise in connection with the event, the date on which the variation takes effect.
(7) In this section “pre-existing term”, in relation to a lease, means the term of the lease apart from the extension in question.
70YD Increase in proportion of residual amount guaranteed: review of status
(1) This section applies where—
(a) a person is lessor under a lease (the “existing lease”) that is not a long funding lease,
(b) the person enters into an arrangement which meets, or arrangements which (taken together) meet, the conditions in subsection (2).
(2) The conditions are that—
(a) as a result of the arrangement or arrangements, there is an increase, after the inception of the lease, in the proportion of the residual amount that is guaranteed as mentioned in section 70YE(1)(b), and
(b) had the arrangement or arrangements been entered into before the inception of the lease, the lease would have been a long funding lease.
(3) The person is to be treated as if—
(a) the existing lease had terminated immediately before the time of the relevant transaction,
(b) another lease (the “new lease”) had been entered into immediately after the time of the relevant transaction,
(c) the term of the new lease were the portion of the term of the existing lease that remains unexpired as at the date of the relevant transaction;
(d) the date of the relevant transaction were the date of both—
(i) the inception of the new lease, and
(ii) the commencement of the term of the new lease.
(4) For the purposes of this section, the “relevant transaction” is the arrangement or, where two or more arrangements have been entered into, the latest of them.
(5) The Treasury may by regulations make provision for or in connection with restricting the application or operation of this section.
(1) In the case of any lease, the minimum lease payments are the minimum payments under the lease over the term of the lease (including any initial payment) together with—
(a) in the case of the lessee, so much of any residual amount as is guaranteed by him or a person connected with him, or
(b) in the case of the lessor, so much of any residual amount as is guaranteed by the lessee or a person who is not connected with the lessor.
(2) In determining the minimum payments, exclude so much of any payment as represents—
(a) charges for services, or
(b) qualifying UK or foreign tax to be paid by the lessor.
(3) In this section—
“qualifying UK or foreign tax” means any tax or duty chargeable under the law of any part of the United Kingdom, or under the law of any foreign country, other than—
income tax,
corporation tax,
any tax chargeable under the law of a foreign country which is similar to income tax or corporation tax,
and here “foreign country” means any territory outside the United Kingdom;
“residual amount” means so much of the fair value of the plant or machinery subject to the lease as cannot reasonably be expected to be recovered by the lessor from the payments under the lease.
(4) In the definition of “residual amount” in subsection (3), “fair value” means—
(a) the market value of the leased plant or machinery,
less
(b) any grants receivable towards the purchase or use of that plant or machinery.
(1) The term of a lease is the period comprising—
(a) so much of the post-commencement period as is a non-cancellable period, and
(b) any subsequent periods which meet the conditions in subsection (2).
(2) The conditions are that—
(a) the lessee has an option to continue to lease the asset for the period (whether with or without further payment), and
(b) it is reasonably certain, at the inception of the lease, that the lessee will exercise that option.
(3) The “post-commencement period” is so much of the period of the lease as begins with the commencement of the term of the lease.
(4) A “non-cancellable period” is any period during which the lessee may terminate the lease only—
(a) upon the occurrence of some remote contingency, or
(b) upon payment by the lessee of such an additional amount that, at the inception of the lease, continuation of the lease is reasonably certain.
(5) If, at the commencement of the term of the lease,—
(a) the market value of the asset exceeds £1 million, and
(b) the estimated market value of the asset 7 years after the commencement of the term of the lease is more than half of the market value of the asset at the commencement of the term of the lease,
subsection (6) applies.
(6) If, in any such case, the term of the lease (apart from this subsection) would be 7 years or less, but—
(a) the lessee has one or more options to continue to lease the asset,
(b) on the assumption that it is reasonably certain, at the inception of the lease, that the lessee will exercise those options, the term of the lease would exceed 7 years, and
(c) on failing to exercise any one of those options, the lessee may be required to make a payment to the lessor,
it is to be assumed for the purposes of this section that any option to continue to lease the asset will be exercised, unless it is reasonably certain, at the inception of the lease, that the option will not be exercised.
(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(8) See also section 70YC(5) (extension, for certain purposes, of term of lease that is not a long funding lease).
(1) This section applies where plant or machinery is or has been, or is to be, leased under a long funding lease.
(2) Construe “termination amount”, in the case of a long funding lease, in accordance with the following provisions of this section.
(3) If—
(a) the lease terminates as a result of a plant or machinery disposal event, or
(b) a plant or machinery disposal event occurs as a result of, or otherwise in connection with, the termination of the lease,
the termination amount is the disposal value that would have fallen to be brought into account by the lessor by reason of the plant or machinery disposal event on the assumptions in subsection (4).
(4) Those assumptions are—
(a) that section 34A (which prevents the lessor's expenditure for long funding leasing from being qualifying expenditure) did not apply in the case of the lessor, and
(b) that the lessor had claimed all the capital allowances that would in consequence have been available to him.
(5) If—
(a) subsection (3) does not apply, and
(b) the lease is a long funding finance lease,
the termination amount is the value at which, immediately after the termination of the lease, the plant or machinery is recognised in the books or other financial records of the lessor.
(6) If—
(a) subsection (3) does not apply, and
(b) the lease is a long funding operating lease,
the termination amount is the market value of the plant or machinery immediately after the termination of the lease.
(7) For the purposes of this section a “plant or machinery disposal event” is an event that would have been a disposal event in relation to the plant or machinery in the case of the lessor on the assumptions in subsection (4).
(1) This section applies where plant or machinery is or has been, or is to be, leased under a long funding lease.
(2) Construe “termination value” in accordance with the following provisions of this section.
(3) The general rule is that the termination value of any plant or machinery is the value of the plant or machinery at or about the time when the lease terminates.
(4) Any reference to calculation by reference to the termination value includes a reference to calculation by reference to any one or more of—
(a) the proceeds of sale, if the plant or machinery is sold after the lease comes to an end,
(b) any insurance proceeds, compensation or similar sums in respect of the plant or machinery,
(c) an estimate of the market value of the plant or machinery.
(5) Any reference to calculation by reference to the termination value also includes a reference to—
(a) determination in a way which, or by reference to factors or criteria which, might reasonably be expected to produce a broadly similar result to calculation by reference to the termination value, or
(b) any other form of calculation indirectly by reference to the termination value.
(1) Construe these expressions as follows—
“absolute owner”, in the application of this Chapter in relation to Scotland, means the owner;
“arrangement” includes any transaction or series of transactions;
“background plant or machinery for a building” is to be construed in accordance with sections 70R to 70T;
“building” includes a reference to—
a structure,
part of a building or structure;
“commencement”, in relation to the term of a lease, means the date on and after which the lessee is entitled to exercise his right to use the complete leased asset under the lease;
for this purpose an asset is to be regarded as complete if its construction is substantially complete;
“derived lease” is to be construed in accordance with section 70L;
“the finance lease test” means the finance lease test in section 70N;
“fixture”—
means any plant or machinery that is so installed or otherwise fixed in or to a building or other description of land as to become, in law, part of that building or other land, and
includes any boiler or water-filled radiator installed in a building as part of a space or water heating system;
“funding lease” has the meaning given by section 70J;
“inception”, in relation to a plant or machinery lease, means the earliest date on which the following conditions are met—
there is a contract in writing for the lease between the lessor and the lessee,
either—
the contract is unconditional, or
if it is conditional, the conditions have been met,
no terms remain to be agreed;
“initial payment”, in the case of a plant or machinery lease, means a payment by the lessee—
at or before the time when the lease is entered into, and
in respect of the plant or machinery which is the subject of the lease;
“lease” includes any agreement or arrangement which is or includes a plant or machinery lease (and “lessor”, “lessee” and other related expressions are to be construed accordingly);
“lease”, in relation to land, includes—
an underlease, sublease or any tenancy,
in England and Wales or Northern Ireland, an agreement for a lease, underlease, sublease, or tenancy,
in Scotland, an agreement (including missives of let not constituting a lease) under which a lease, sublease or tenancy is to be executed,
in the case of land situated outside the United Kingdom, any interest corresponding to a lease as so defined,
and “lessor”, “lessee” and other related expressions are to be construed accordingly;
“lease”, in relation to plant or machinery, includes a sublease (and “lessor”, “lessee” and other related expressions are to be construed accordingly);
“lessee”, in relation to a lease, includes any person entitled to the lessee's interest under the lease;
“lessor”, in relation to a lease, includes any person entitled to the lessor's interest under the lease;
“long funding lease” has the meaning given by section 70G;
“long funding finance lease” means-
in relation to any person, a long funding lease that meets the finance lease test by virtue of section 70N(1)(a), or
in relation to a lessee, a right-of-use lease which is a long funding lease—
that meets the lease payments test in section 70O or the useful economic life test in section 70P, but
is not a lease that, before a relevant change of classification, was a long funding operating lease;
“long funding operating lease” means a long funding lease which is not a long funding finance lease;
“market value”, in relation to plant or machinery, is to be construed in accordance with subsection (2);
“minimum lease payments” has the meaning given by section 70YE;
“mixed lease” is to be construed in accordance with section 70L;
“plant or machinery lease” has the meaning given by section 70K (and see also sections 70L and 70M);
“relevant change of classification” has the meaning given by section 70YA(11);
“remaining useful economic life”, in the case of any leased plant or machinery, is the period—
beginning with the commencement of the term of the lease, and
ending when the asset is no longer used, and no longer likely to be used, by any person for any purpose as a fixed asset of a business;
“right-of-use lease” , in relation to a lessee, means a lease in respect of which, under generally accepted accounting practice—
a right-of-use asset falls (or would fall) at the commencement date of the lease to be recognised for accounting purposes in the accounts of the lessee, or
a right-of-use asset would fall to be so recognised but for the lessee granting a sublease of the leased asset,
and, in determining whether a lease falls within paragraph (a) or (b) at any time in an accounting period, it is to be assumed that the accounting policy applied in drawing up the lessee's accounts for the period also applied at the commencement date of the lease;
“short lease” is to be construed in accordance with section 70I;
“the term”, in relation to a lease, is to be construed in accordance with section 70YF (but see also section 70YC(5) (extension, for certain purposes, of term of lease that is not a long funding lease));
“termination”, in relation to a lease,—
means the coming to an end of the lease, whether by effluxion of time or in any other way, and
includes in particular the bringing to an end of the lease by any person or by operation of law,
and related expressions are to be construed accordingly;
“termination amount” is to be construed in accordance with section 70YG;
“termination value” is to be construed in accordance with section 70YH.
(2) The market value of any plant or machinery at any time is to be determined on the assumption of a disposal by an absolute owner free from all leases and other encumbrances.
(3) In relation to a lease, any reference to plant or machinery includes a reference to fixtures.
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5) Any necessary apportionments under or by virtue of this Chapter are to be made on a just and reasonable basis.
70YJ Power to vary the meaning of certain expressions
(1) The Treasury may by regulations make provision amending this Chapter so as to vary—
(a) the meaning of “plant or machinery lease”, or
(b) the finance lease test.
(2) A statutory instrument containing regulations under this section is not to be made unless a draft of the instrument has been laid before, and approved by a resolution of, the House of Commons.
(1) For the purposes of this Part computer software is treated as plant (whether or not it would constitute plant apart from this section).
(2) If a person carrying on a qualifying activity incurs capital expenditure in acquiring, for the purposes of the qualifying activity, a right to use or otherwise deal with computer software, this Part applies as if—
(a) the right and the software to which it relates were plant,
(b) the plant were provided for the purposes of the qualifying activity, and
(c) so long as the person is entitled to the right, the person owned the plant as a result of incurring the capital expenditure.
(1) This section applies if a person—
(a) has incurred qualifying expenditure on the provision of plant consisting of computer software or the right to use or otherwise deal with computer software, and
(b) grants to another a right to use or otherwise deal with the whole or part of the computer software in circumstances in which the consideration for the grant—
(i) consists of a capital sum, or
(ii) would consist of a capital sum if the consideration were in money.
(2) The person is required to bring a disposal value into account unless—
(a) while the person owned the computer software or the right to use or otherwise deal with the computer software, and
(b) before the grant of the right referred to in subsection (1)(b),
there has been a disposal event falling within section 61(1)(e) (use for purposes other than those of the qualifying activity) or 61(1)(f) (permanent discontinuance of the qualifying activity).
(3) The disposal value to be brought into account under this section depends on the circumstances of the grant of the right, as shown in the Table—
Table
Disposal values: grant of software right
1. Circumstances of grant | 2. Disposal value
1. The grant is for a consideration not consisting entirely of money. | The market value of the right granted at the time of the grant.
2. The grant is made where— it is for no consideration or at less than market value, there is no charge to tax under ITEPA 2003, and the condition in subsection (5) is met by the grantee. | The market value of the right granted at the time of the grant.
3. The grant is made in circumstances other than those given in item 1 or 2. | The net consideration in money received in respect of the grant, together with— any insurance money received in respect of the computer software as a result of an event affecting the consideration obtainable on the grant, and any other compensation of any description so received, so far as it consists of capital sums.
(4) The amounts referred to in column 2 of the Table are those received by the person required to bring the disposal value into account.
(5) The condition referred to in item 2 of the Table is met by the grantee if—
(a) the grantee’s expenditure on the acquisition of the plant cannot be qualifying expenditure under this Part or Part 6 (research and development allowances), or
(b) the grantee is a dual resident investing company which is connected with the grantor.
(1) This section applies if a person is required to bring into account a disposal value in respect of—
(a) computer software, or
(b) the right to use or otherwise deal with computer software.
(2) For the purpose only of—
(a) determining whether the limit on the disposal value under section 62 is exceeded, and
(b) reducing the amount of that disposal value so that the limit is not exceeded,
the disposal value is to be taken to be increased by the amount given in subsection (3).
(3) The amount is the total of any disposal values which, in respect of that person and that plant, fall or have fallen to be brought into account under section 72.
Plant or machinery in respect of which qualifying expenditure has been incurred is a short-life asset if—
(a) its treatment as a short-life asset is not ruled out by section 84, and
(b) the person incurring the expenditure elects for the plant or machinery to be treated as a short-life asset.
84 Cases in which short-life asset treatment is ruled out
Treatment of plant or machinery as a short-life asset is ruled out in any of the cases listed in column 1 of the Table, unless an exception listed in column 2 applies.
Table
Short-life asset treatment
1. Short-life asset treatment ruled out | 2. Exception (if any)
1. The expenditure is treated as incurred for the purposes of a qualifying activity under— section 13 (use for qualifying activity of plant or machinery provided for other purposes), or section 13A (use for other purposes of plant or machinery provided for long funding leasing), or section 14 (use for qualifying activity of plant or machinery which is a gift).
2. The plant or machinery is the subject of special leasing (as defined by section 19).
3. The plant or machinery is a car (as defined by section 268A). | The car is a hire car for a disabled person (as defined by section 268D).
4. The expenditure is special rate expenditure (see Chapter 10A). | The expenditure is incurred on the provision of a car which is a hire car for a disabled person (as defined by section 268D)
5. The plant or machinery is provided for leasing. | The plant or machinery is a car which is a hire car for a disabled person (as defined by section 268D). The plant or machinery will be used within the designated period (as defined by section 106) for a qualifying purpose (as defined by sections 122 to 125).
6. Section 109 provides only a 10% writing-down allowance in respect of expenditure on the plant or machinery.
7. The plant or machinery is leased to two or more persons jointly in circumstances such that section 116 applies.
8. The plant or machinery is a ship.
9. The expenditure was incurred partly for the purposes of a qualifying activity and partly for other purposes (see Chapter 15).
10. The expenditure is required to be allocated to a single asset pool under section 211 (partial depreciation subsidy).
85 Election for short-life asset treatment: procedure
(1) An election under section 83 must specify—
(a) the plant or machinery which is the subject of the election,
(b) the qualifying expenditure incurred in respect of it, and
(c) the date on which the expenditure was incurred.
(2) An election under section 83 must be made by notice given to an officer of Revenue and Customs—
(a) for income tax purposes, on or before the normal time limit for amending a tax return for the tax year in which the relevant chargeable period ends;
(b) for corporation tax purposes, no later than 2 years after the end of the relevant chargeable period.
(3) “The relevant chargeable period” means—
(a) the chargeable period in which the qualifying expenditure was incurred, or
(b) if the qualifying expenditure was incurred in different chargeable periods, the first chargeable period in which any of the qualifying expenditure was incurred.
(4) An election under section 83 is irrevocable.
(5) All such assessments and adjustments of assessments are to be made as are necessary to give effect to the election.
(1) Qualifying expenditure in respect of a short-life asset, if allocated to a pool, must be allocated to a single asset pool (a “short-life asset pool”).
(2) If the final chargeable period for the short-life asset pool has not occurred before the relevant cut-off—
(a) the pool ends at the relevant cut-off without a final chargeable period,
(b) the available qualifying expenditure in the pool is allocated to the appropriate pool for the first chargeable period ending after the relevant cut-off, and
(c) the asset ceases to be a short-life asset.
(3) In this Chapter “the relevant cut-off” means—
(a) if any of the qualifying expenditure incurred on the provision of the short-life asset was incurred before the designated day, the fourth anniversary of the end of the relevant chargeable period, and
(b) in any other case, the eighth anniversary of the end of the relevant chargeable period.
(3A) In subsection (3)—
“the designated day” means—
for corporation tax purposes, 1 April 2011, and
for income tax purposes, 6 April 2011;
“the relevant chargeable period” means—
the chargeable period in which the qualifying expenditure was incurred on the provision of the short-life asset, or
if the qualifying expenditure was incurred in different chargeable periods, the first chargeable period in which any of the qualifying expenditure was incurred.
(4) For the purposes of subsection (2), the final chargeable period occurs before the relevant cut-off only if it ends on or before it.
(5) In subsection (2)(b) “appropriate pool” means—
(a) in the case of expenditure incurred on the provision of a car that is not a main rate car (as defined by section 104AA), the special rate pool, and
(b) in any other case, the main pool.
(1) This section applies if—
(a) plant or machinery is a short-life asset on the basis that it has been provided for leasing but will be used within the designated period for a qualifying purpose (see item 5 of the Table in section 84),
(b) in a chargeable period ending on or before the relevant cut-off, the short-life asset begins to be used otherwise than for a qualifying purpose, and
(c) the time when it begins to be so used falls within the first 8 years of the designated period.
(2) If this section applies—
(a) the short-life asset pool ends without a final chargeable period,
(b) the available qualifying expenditure in the pool is allocated to the main pool for the chargeable period in which the asset begins to be used otherwise than for a qualifying purpose, and
(c) the asset ceases to be a short-life asset.
If—
(a) a short-life asset is disposed of at less than market value,
(b) the disposal is not one in respect of which an election is made under section 89(6), and
(c) there is no charge to tax under ITEPA 2003,
the disposal value to be brought into account for the purposes of Chapter 5 is the market value of the asset.
(1) This section applies if, at any time before the relevant cut-off, a person (“the transferor”) disposes of a short-life asset to a connected person.
(2) Subject to subsection (6)—
(a) the transferor is to be treated as having sold the short-life asset to the connected person for an amount equal to the available qualifying expenditure in the short-life asset pool for the chargeable period in which the disposal occurs, and
(b) the connected person is to be treated as having incurred qualifying expenditure of the same amount in buying the short-life asset.
(3) Subject to subsection (6)—
(a) sections 217 and 218 (restrictions on first-year and other allowances in the case of certain transactions between connected persons, to obtain a tax advantage etc.), and
(b) section 225 (further restrictions in the case of sale and finance leaseback),
do not apply to the disposal.
(4) Immediately after the disposal of the short-life asset, the connected person is to be taken to have made an election under section 83 (so that the plant or machinery is a short-life asset in his hands).
(5) In relation to the connected person, “the relevant cut-off” means the date that would have been the relevant cut-off in relation to the transferor.
(6) Subsections (2) and (3) apply in relation to a disposal only if—
(a) the transferor, and
(b) the connected person,
elect that they should apply.
(7) An election under subsection (6) must be made by notice given to an officer of Revenue and Customs no later than 2 years after the end of the chargeable period in which the disposal occurred.
“Long-life asset expenditure” means qualifying expenditure—
(a) incurred on the provision of a long-life asset for the purposes of a qualifying activity, and
(b) not excluded from being long-life asset expenditure by any of sections 93 to 100.
(1) For the purposes of this Chapter “long-life asset” means plant or machinery which—
(a) if new, can reasonably be expected to have a useful economic life of at least 25 years, and
(b) if not new, could reasonably have been expected when new to have a useful economic life of at least 25 years.
(2) “New” means unused and not second-hand.
(3) The useful economic life of plant or machinery is the period—
(a) beginning when it is first brought into use by any person for any purpose, and
(b) ending when it is no longer used or likely to be used by anyone for any purpose as a fixed asset of a business.
(1) Expenditure is not long-life asset expenditure if it is incurred on the provision of plant or machinery which is a fixture in, or is provided for use in, any building used wholly or mainly—
(a) as a dwelling-house, hotel, office, retail shop or showroom, or
(b) for purposes ancillary to the use referred to in paragraph (a).
(2) In this section—
“fixture” has the meaning given by section 173(1);
“retail shop” includes any premises of a similar character where a retail trade or business, including repair work, is carried on.
(1) Expenditure is not long-life asset expenditure if—
(a) it is incurred before 1st January 2011 on the provision of a ship of a sea-going kind, and
(b) each of the conditions in subsection (2) is met.
(2) The conditions are that—
(a) the ship is not an offshore installation,
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(c) the primary use to which ships of the same kind are put by their owners (or, if their use is made available to others, those others) is a use otherwise than for sport or recreation.
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1) Expenditure is not long-life asset expenditure if it is incurred before 1st January 2011 on the provision of a railway asset used by any person wholly and exclusively for the purposes of a railway business.
(2) “Railway asset” means—
(a) a locomotive, tram or other vehicle, or a carriage, wagon or other rolling stock designed or adapted for use on a railway;
(b) anything which is, or is to be, comprised in any railway station, railway track or light maintenance depot or any apparatus which is, or is to be, installed in association with such a station, track or depot.
(3) “Railway business” means a business so far as carried on to provide a service to the public for carrying goods or passengers by means of a railway in the United Kingdom or the Channel Tunnel.
(4) For the purposes of subsection (1), a railway asset of a kind described in subsection (2)(a) is not to be treated as used otherwise than wholly and exclusively for the purposes of a railway business merely because it is used to carry goods or passengers—
(a) from places inside the United Kingdom to places outside the United Kingdom, or
(b) from places outside the United Kingdom to places inside the United Kingdom.
(5) In subsections (2) and (3), “railway” has the same meaning as in section 81(2) of the 1993 Act (“railway” includes tramways and other modes of guided transport).
(6) In this section—
“the 1993 Act” means the Railways Act 1993 (c. 43);
“goods” has the same meaning as in Part I of the 1993 Act;
“railway station” and “railway track” include—
anything included in the definitions of “station” and “track” in section 83 of the 1993 Act, and
anything else that would be included if in section 83 “railway” had the meaning given in section 81(2) of the 1993 Act;
“light maintenance depot” means—
any light maintenance depot within the meaning of Part I of the 1993 Act, and
any land or other property which is the equivalent of such a depot in relation to anything which is a railway only when “railway” has the meaning given by section 81(2) of the 1993 Act.
97 Expenditure within the relevant monetary limit: general
Expenditure is not long-life asset expenditure if it is—
(a) expenditure to which the monetary limits apply, and
(b) incurred in a chargeable period for which the relevant monetary limit is not exceeded.
(1) The monetary limits apply to expenditure incurred by an individual for a chargeable period if—
(a) the expenditure was incurred by him for the purposes of a qualifying activity carried on by him,
(b) the whole of his time is substantially devoted in that period to the carrying on of that qualifying activity, and
(c) the expenditure is not within subsection (4).
(2) The monetary limits apply to expenditure incurred by a partnership for a chargeable period if—
(a) all of the members of the partnership are individuals,
(b) the expenditure was incurred by the partnership for the purposes of a qualifying activity carried on by it,
(c) at all times throughout that period at least half the partners for the time being devote the whole or a substantial part of their time to the carrying on of that qualifying activity, and
(d) the expenditure is not within subsection (4).
(3) The monetary limits apply for the purposes of corporation tax to any expenditure incurred by a company for a chargeable period other than expenditure within subsection (4).
(4) Expenditure is within this subsection if it is—
(a) incurred on the provision of a share in plant or machinery,
(b) treated as a result of section 538 (contribution allowances: plant and machinery) as incurred on the provision of plant or machinery, or
(c) incurred on the provision of plant or machinery for leasing (whether or not the leasing is in the course of a trade).
(1) The monetary limit in the case of a chargeable period of 12 months is £100,000.
(2) If, in the case of an individual or partnership, the chargeable period is longer or shorter than 12 months, the monetary limit is the amount given by a proportional increase or reduction of £100,000.
(3) If, in the case of a company, the chargeable period is shorter than 12 months, the monetary limit is the amount given by a proportional reduction of £100,000.
(4) If, in a chargeable period, a company has one or more associated companies, the monetary limit for that period is—
L
N
+
1
where—
L is the monetary limit applicable under subsection (1) or (3), and
N is the number of associated companies.
(4A) The rules in Part 3A of CTA 2010 (see sections 18E to 18J) which apply for determining whether a company is another company's associated company in an accounting period for the purposes of section 18D of that Act apply for the purposes of subsection (4).
(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1) The monetary limit for a chargeable period is exceeded if the total expenditure in that period that meets the conditions in subsection (2) exceeds that limit.
(2) The conditions are that the expenditure—
(a) is long-life asset expenditure, or would be long-life asset expenditure in the absence of section 97 (expenditure within monetary limit), and
(b) is expenditure to which the monetary limits apply.
(3) Subsection (4) applies if, in the case of any contract for the provision of plant or machinery, the capital expenditure which is (or is to be) incurred under the contract is (or may fall to be) treated for the purposes of this Act as incurred in different chargeable periods.
(4) All of the expenditure falling to be incurred under the contract on the provision of the plant or machinery is to be treated for the purposes of this section as incurred in the first chargeable period in which any of the expenditure is incurred.