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 379: Lessee under long funding operating lease

1160. This section reduces the deductions which a lessee under a long funding operating lease of plant or machinery may make in calculating its profits for corporation tax purposes. It is based on section 502K(1) to (3) and (6) to (9) of ICTA.

1161. The amount of the deduction is reduced by reference to the expected reduction in value of the plant or machinery over the term of the lease. As the lessee is entitled to capital allowances, it effectively obtains relief through the allowances for the amount of the lease payments which it cannot deduct in calculating its profits.

1162. The words “had that value been estimated at the commencement of the term” have been added in subsection (6)(b) to explain the reasoning behind the use of the words “would have been expected” in section 502K(6)(b) of ICTA.