Modifications etc. (not altering text)

C1 S. 45H(2) modified (with effect in accordance with s. 167 of the amending Act) by Finance Act 2003 (c. 14) , Sch. 30 para. 7

Part 2 U.K. Plant and machinery allowances

Modifications etc. (not altering text)

C2 Pt. 2 modified (24.2.2003) by Proceeds of Crime Act 2002 (c. 29), s. 458(1), Sch. 10 para. 12 (with Sch. 10 para. 17(1)); S.I. 2003/120, art. 2, Sch. (with arts. 3 4) (as amended (20.2.2003) by S.I. 2003/333, art. 14)

C3 Pt. 2 restricted (5.10.2004) by Energy Act 2004 (c. 20) , s. 198(2) , Sch. 9 paras. 10, 22 (with s. 38(2) ); S.I. 2004/2575 , art. 2(1) , Sch. 1

C4 Pt. 2 modified (5.10.2004) by Energy Act 2004 (c. 20) , s. 198(2) , Sch. 9 paras. 9(2), 21(2) (with s. 38(2)); S.I. 2004/2575, art. 2(1) , Sch. 1

C5 Pt. 2 restricted (5.10.2004) by Energy Act 2004 (c. 20) , s. 198(2) , Sch. 4 para. 4 ; S.I. 2004/2575 , art. 2(1) , Sch. 1

C6 Pt. 2 modified (22.7.2008) by Crossrail Act 2008 (c. 18), Sch. 13 para. 19

C7 Pt. 2 modified (22.7.2008) by Crossrail Act 2008 (c. 18), Sch. 13 para. 35

C8 Pt. 2 modified (22.7.2008) by Crossrail Act 2008 (c. 18), Sch. 13 paras. 36, 37

C9 Pt. 2 modified (21.7.2009) by Finance Act 2009 (c. 10), s. 24

C10 Pt. 2 modified (17.7.2013) by Finance Act 2013 (c. 29), s. 73(7)-(11) (with s. 73(6))

C11 Pt. 2 modified (10.6.2021) by Finance Act 2021 (c. 26), s. 9(1)(a)

[F1 Chapter 6A U.K. Interpretation of provisions about long funding leases

Textual Amendments

F1 Pt. 2 Ch. 6A inserted (with effect in accordance with Sch. 8 para. 15 of the amending Act) by Finance Act 2006 (c. 25), Sch. 8 para. 7

Modifications etc. (not altering text)

C12 Pt. 2 Ch. 6A applied (21.7.2008) by Finance Act 2008 (c. 9), Sch. 20 para. 11(12)

C13 Pt. 2 Ch. 6A applied (21.7.2009) by Finance Act 2009 (c. 10), Sch. 33 para. 9(c)

C14 Pt. 2 Ch. 6A applied (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), ss. 381(1), 1184(1) (with Sch. 2)

C15 Pt. 2 Ch. 6A modified (10.6.2021) by Finance Act 2021 (c. 26), s. 17

The tests for being a funding lease U.K.

70O The lease payments test U.K.

(1) A lease meets the lease payments test if—

(a) the present value of the minimum lease payments (see section 70YE),

is equal to

(b) 80% or more of the fair value of the leased plant or machinery.

(2) The present value of the minimum lease payments is to be calculated by using the interest rate implicit in the lease.

(3) In this section “fair value” means—

(a) the market value of the leased plant or machinery,

less

(b) any grants receivable towards the purchase or use of that plant or machinery.

(4) For the purposes of this section—

(a) the interest rate implicit in the lease is the interest rate that would apply in accordance with normal commercial criteria, including, in particular, generally accepted accounting practice (where applicable), but

[F2 (b) if a rate cannot be determined in accordance with paragraph (a), the interest rate implicit in the lease is taken to be [F3 the incremental borrowing rate].]

[F4 (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.]]

Textual Amendments

F2 S. 70O(4)(b) substituted (with effect in accordance with Sch. 14 para. 10 of the amending Act) by Finance Act 2019 (c. 1), Sch. 14 para. 9(2)

F3 Words in s. 70O(4)(b) substituted (with effect in accordance with s. 132(4) of the amending Act) by Finance Act 2021 (c. 26), s. 132(1)(a)

F4 S. 70O(5)(6) substituted for s. 70O(5) (with effect in accordance with s. 132(4) of the amending Act) by Finance Act 2021 (c. 26), s. 132(1)(b)