Part 2

Trading income
Chapter 10A

Leases of plant or machinery: special rules for long funding leases

Lessors under long funding operating leases

Lessor under long funding operating lease: periodic deduction
148D
1
This section applies if a person carrying on a trade is the lessor of any plant or machinery under a long funding operating lease for the whole or part of a period of account.
2
A deduction is allowed in calculating the profits of the person for the period of account for income tax purposes.
3
The amount of the deduction is so much of the expected gross reduction in value over the term of the lease as is attributable to the period of account.
4
The expected gross reduction in value over the term of the lease is—
a
the starting value of the plant or machinery, less
b
the amount which at the commencement of the term of the lease is expected to be its residual value (or, if section 148DB applies, would have been expected to be that value had that value been estimated at that time).
5
The expected gross reduction in value over the term of the lease that is attributable to the period of account is found by apportioning that reduction on a time basis according to the proportion of the term of the lease that falls in the period of account.
6
For the meaning of “starting value”, see—
a
section 148DA (“starting value”: general), and
b
section 148DB (“starting value” where plant or machinery originally unqualifying).
7
For the meaning of “residual value”, see section 148J(2).
Pt. 2 Ch. 10A, (ss 148A-148J) inserted (19.7.2006) by Finance Act 2006 (c. 25), s. 81, Sch. 8 para. 13
Pt. 2 Ch. 10A, (ss. 148A-148J) inserted (19.7.2006) by Finance Act 2006 (c. 25), s. 81, Sch. 8 para. 13
S. 148D substituted (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 447 (with Sch. 2)