Corporation Tax Act 2009

56 Car or motor cycle hire

(1) Subsection (2) applies if, in calculating the profits of a trade, a deduction is allowed for expenses incurred on the hiring of a car or motor cycle—

(a) which is not a qualifying hire car or motor cycle (see section 57(2)), and

(b) the retail price of which when new exceeds £12,000.

(2) The amount of the deduction which would otherwise be allowable is reduced by multiplying the amount by the fraction—

where RP is the retail price of the car or motor cycle when new.

(3) Subsection (4) applies if a deduction is reduced as a result of subsection (2), or a corresponding provision, and subsequently—

(a) there is a rebate (however described) of the hire charges, or

(b) a debt in respect of any of the hire charges is released otherwise than as part of a statutory insolvency arrangement.

(4) The amount that, as a result of the rebate or release—

(a) is brought into account as a receipt of the trade, or

(b) is treated as a post-cessation receipt under section 193 (debts released after cessation),

is reduced by multiplying it by the fraction in subsection (2).

(5) In this section “corresponding provision” means—

(a) section 1251(2) (car or motor cycle hire: expenses of management),

(b) section 48(2) of ITTOIA 2005 (car or motor cycle hire: trade profits and property income), or

(c) section 76ZN(2) of ICTA (car or motor cycle hire: expenses of insurance companies).

(6) The power under section 74(4) of CAA 2001 to increase or further increase the sums of money specified in Chapter 8 of Part 2 of CAA 2001 includes the power to increase or further increase the sum of money specified in subsection (1)(b) or (2).