Corporation Tax Act 2010

377 Lessee under long funding finance lease: limit on deductions

(1) This section applies if a company is the lessee of any plant or machinery under a long funding finance lease for the whole or part of any period of account.

(2) In calculating the company’s profits for the period of account for corporation tax purposes, the amount deducted in respect of amounts payable under the lease must not exceed the finance charges.

(3) In subsection (2) “the finance charges” means the amounts which, in accordance with generally accepted accounting practice, fall (or would fall) to be shown in the company’s accounts as finance charges in respect of the lease.

(4) If the lease is one which, in accordance with such practice, falls (or would fall), to be treated as a loan, subsections (2) and (3) apply as if the lease were one which, in accordance with such practice, fell to be treated as a finance lease.