Capital Allowances Act 2001

[F1 228D Lessor’s income or profits U.K.

(1) This section applies in relation to the calculation of the lessor’s income or profits for a period of account for the purpose of income tax or corporation tax.

(2) Where—

(a) an amount receivable in respect of the lessor’s interest under the leaseback falls to be taken into account in that calculation, and

(b) that amount is reduced by an amount due to the lessee under the leaseback,

that reduction shall be disregarded when taking the amount receivable into account.

(3) The amounts receivable in respect of the lessor’s interest under the leaseback that fall to be taken into account in that calculation may be disregarded to the extent that they exceed the permitted threshold (whether or not subsection (2) applies).

(4) The permitted threshold is the total of—

(a) gross earnings, and

(b) the allowable proportion of the capital repayment.

(5) In subsection (4)(a) “ gross earnings ” means the amount shown in the lessor’s accounts in respect of the lessor’s gross earnings under the leaseback.

(6) In subsection (4)(b) “ allowable proportion of the capital repayment ” means the amount obtained by this calculation—

where—

“ Investment Reduction For Period ” means the amount shown in the lessor’s accounts in respect of the reduction in net investment in the leaseback, and

“ Net Investment ” means the amount shown in the lessor’s accounts as the lessor’s net investment in the leaseback at the beginning of its term.

(7) This section does not apply to a leaseback if the lessee is a lessee by way of an assignment made before 17 March 2004.]

Textual Amendments

F1 Ss. 228A-228J and cross-heading inserted (with effect in accordance with s. 134(3) of the amending Act) by Finance Act 2004 (c. 12), s. 134

Modifications etc. (not altering text)

C8 S. 228D modified (19.7.2007) by Finance Act 2007 (c. 11), Sch. 5 para. 17(9)