Income Tax (Trading and Other Income) Act 2005

[F1 [F2 Lessors under long funding finance leases] U.K.

Textual Amendments

F1 Pt. 2 Ch. 10A, (ss 148A-148J) inserted (19.7.2006) by Finance Act 2006 (c. 25), s. 81, Sch. 8 para. 13

F2 Pt. 2 Ch. 10A inserted (19.7.2006) by Finance Act 2006 (c. 25), s. 81, Sch. 8 para. 13

148A Lessor under long funding finance lease: rental earnings U.K.

(1) This section applies for the purpose of calculating the profits of a person carrying on a trade for a period of account in which he is the lessor of any plant or machinery under a long funding finance lease.

(2) The amount to be brought into account as the lessor's taxable income from the lease for the period of account is the amount of the rental earnings in respect of the lease for the period of account.

(3) The “rental earnings” for any period is the amount which, in accordance with generally accepted accounting practice, falls (or would fall) to be treated as the gross return on investment for that period in respect of the long funding lease where it meets the finance lease test.

(4) If the lease is one which, under generally accepted accounting practice, falls (or would fall) to be treated as a loan in the accounts in question, so much of the rentals under the lease as fall (or would fall) to be treated as interest are to be treated for the purposes of this section as rental earnings.

Modifications etc. (not altering text)

C1 S. 148A excluded (21.7.2008) by Finance Act 2008 (c. 9), Sch. 20 para. 11(2)

C2 S. 148A excluded (21.7.2009) by Finance Act 2009 (c. 10), Sch. 33 para. 5 (with Sch. 33 paras. 4, 9)

148B Lessor under long funding finance lease: exceptional items U.K.

(1) This section applies for the purpose of calculating the profits of a person carrying on a trade for a period of account if he is or has been the lessor under a long funding finance lease.

(2) This section has effect where a profit or loss (whether of an income or capital nature)—

(a) arises to the person in connection with the lease, and

(b) in accordance with generally accepted accounting practice falls to be recognised for accounting purposes in a period of account, but

(c) would not, apart from this section, be brought into account in calculating the profits of the person.

(3) The profit or loss is to be treated—

(a) in the case of a profit, as income of the person that is attributable to the lease,

(b) in the case of a loss, as a revenue expense incurred by the person in connection with the lease.

(4) Any reference in this section to an amount falling to be recognised for accounting purposes in a period of account is a reference to an amount falling to be recognised for accounting purposes—

(a) in the person's profit and loss account or income statement,

(b) in the person's statement of recognised gains and losses or statement of changes in equity, or

(c) in any other statement of items brought into account in computing the person's profits or losses for that period.

Modifications etc. (not altering text)

C3 S. 148B excluded (21.7.2008) by Finance Act 2008 (c. 9), Sch. 20 para. 11(8)

C4 S. 148B excluded (21.7.2009) by Finance Act 2009 (c. 10), Sch. 33 para. 7 (with Sch. 33 paras. 4, 9)

148C Lessor under long funding finance lease making termination payment U.K.

(1) This section applies for the purpose of calculating the profits of a person carrying on a trade for a period of account if he is or has been the lessor under a long funding finance lease.

(2) Where—

(a) the lease terminates, and

(b) a sum calculated by reference to the termination value is paid to the lessee,

no deduction in respect of the sum paid to the lessee is allowed in calculating the profits of the person.

(3) This section does not prevent a deduction in respect of a sum to the extent that the sum is brought into account in determining the person's rental earnings.]