Corporation Tax Act 2010

Corporation Tax Act 2010

2010 CHAPTER 4

Introduction

Part 9: Leasing plant or machinery

Chapter 2: Long funding leases of plant or machinery

Section 360: Lessor under long funding finance lease: rental earnings

1118. This section determines the taxable income of the lessor from a long funding finance lease. It is based on section 502B of ICTA.

1119. The taxable income is the amount of rental earnings. The calculation of rental earnings follows GAAP. The rental earnings is the amount that in accordance with that practice is to be treated as gross return on investment or, in a case where in accordance with that practice the lease is to be treated as a loan, as interest.

1120. Section 502B(3) of ICTA includes in relation to the lease the words “where it meets the finance lease test”. Those words are otiose and have been omitted from subsection (3).

1121. Section 502B(4) of ICTA refers to the lease being “treated as a loan in the accounts in question”. There is no other reference to “accounts” in section 502B and those words have been changed in subsection (4) to read “treated as a loan for the period of account” linking back to the “period of account” mentioned in subsection (1).