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: termination of lease
148F
1
This section applies in calculating for income tax purposes the profits of a person carrying on a trade if the person is the lessor immediately before the termination of a long funding operating lease.
2
If the termination amount exceeds the sum of the amounts in subsection (3), an amount equal to the excess is treated as income of the person attributable to the lease arising in the period of account in which it terminates.
3
The amounts referred to in subsection (2) are—
a
the total amounts paid to the lessee that are calculated by reference to the termination value,
b
the excess relevant value for section 148D (see subsection (6)), and
c
the excess expenditure for section 148E (see subsection (7)).
4
If the sum of the amounts in subsection (3) exceeds the termination amount, the excess is treated as a revenue expense incurred by the person in connection with the lease in the period of account in which it terminates.
5
No deduction is allowed in respect of any sums within subsection (3)(a).
6
“The excess relevant value for section 148D” is the amount (if any) by which—
a
the starting value of the plant or machinery for the purposes of section 148D(4) (lessor under long funding operating lease: periodic deduction), exceeds
b
the total of the deductions allowable under section 148D for periods of account for the whole or part of which the person was the lessor.
7
“The excess expenditure for section 148E” is the amount (if any) by which—
a
the total of any amounts of capital expenditure incurred by the person which constitute additional expenditure in the case of the lease for the purposes of section 148E (long funding operating lease: lessor's additional expenditure), exceeds
b
the total of any deductions allowable under section 148E for periods of account for the whole or part of which the person was the lessor.
8
For the meaning of “termination amount” and “termination value”, see sections 70YG and 70YH of
CAA
2001 (as applied by section 148J(4)).
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. 148F 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. 451 (with Sch. 2)