132Replacement of LIBOR with incremental borrowing rateU.K.
(1)In section 70O of CAA 2001 (funding leases: the lease payments test)—
(a)in subsection (4)(b), for “1% above LIBOR” substitute “ the incremental borrowing rate ”;
(b)for subsection (5) substitute—
“(5)For this purpose, the incremental borrowing rate has the same meaning as it has for accounting purposes.
(6)The Treasury may by regulations amend this section for the purpose of replacing references to the incremental borrowing rate with references to another rate.”
(2)In section 228MB of CAA 2001 (plant or machinery leases: present value of asset)—
(a)in subsection (3), for “1% above LIBOR” substitute “ the incremental borrowing rate ”;
(b)for subsection (4) substitute—
“(4)For this purpose, the incremental borrowing rate has the same meaning as it has for accounting purposes.
(5)The Treasury may by regulations amend this section for the purpose of replacing references to the incremental borrowing rate with references to another rate.”
(3)In section 437C of CTA 2010 (plant or machinery lease: present value of lease)—
(a)in subsection (6), for “1% above LIBOR” substitute “ the incremental borrowing rate ”;
(b)for subsection (7) substitute—
“(7)For this purpose, the incremental borrowing rate has the same meaning as it has for accounting purposes.
(7A)The Treasury may by regulations amend this section for the purpose of replacing references to the incremental borrowing rate with references to another rate.”
(4)Subsection (1) has effect in relation to leases the inception of which (within the meaning of section 70YI of CAA 2001) is on or after 1 January 2022.
(5)Subsection (2) has effect in relation to leases entered into on or after 1 January 2022.
(6)Subsection (3) has effect in cases where the relevant time for the purposes of section 437C of CTA 2010 is on or after 1 January 2022.