[F170OThe lease payments testU.K.
(1)A lease meets the lease payments test if—
(a)the present value of the minimum lease payments (see section 70YE),
is equal to
(b)80% or more of the fair value of the leased plant or machinery.
(2)The present value of the minimum lease payments is to be calculated by using the interest rate implicit in the lease.
(3)In this section “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.
(4)For the purposes of this section—
(a)the interest rate implicit in the lease is the interest rate that would apply in accordance with normal commercial criteria, including, in particular, generally accepted accounting practice (where applicable), but
(b)if the interest rate implicit in the lease cannot be determined in accordance with paragraph (a), it is the temporal discount rate for the purposes of section 70 of [F2FA] 2005 (companies: film relief: valuation of “rights to guaranteed income” and “disposed rights”).]
Textual Amendments
F1Pt. 2 Ch. 6A inserted (with effect in accordance with Sch. 8 para. 15 of the amending Act) by Finance Act 2006 (c. 25), Sch. 8 para. 7
F2Word in s. 70O(4)(b) substituted (21.7.2009) by Finance Act 2009 (c. 10), s. 126(5)(a)