SCHEDULES

SCHEDULE 32Leases of plant or machinery

Disposal values: commencement of long funding finance leases

1

1

Section 61 of CAA 2001 (disposal events and disposal values) is amended as follows.

2

In the Table in subsection (2), for item 5A substitute—

5A. Commencement of the term of a long funding finance lease of the plant or machinery.

The greater of—

  1. a

    the market value of the plant or machinery at the commencement of the term of the lease, and

  2. b

    the qualifying lease payments.

3

After subsection (5) insert—

5A

In item 5A of the Table “qualifying lease payments” means the minimum payments under the lease (including any initial payment), excluding the following—

a

so much of any payment as, under generally accepted accounting practice, falls (or would fall) to be treated as the gross return on investment in respect of the lease,

b

so much of any payment as represents charges for services, and

c

so much of any payment as represents qualifying UK or foreign tax (within the meaning of section 70YE) to be paid by the lessor.

4

Omit subsections (6) to (9).

2

Accordingly, in FA 2008, in Schedule 20, omit paragraph 4.

3

1

Section 25A of TCGA 1992 (long funding leases of plant or machinery: deemed disposals) is amended as follows.

2

In subsection (2)(a), for “the value described in subsection (4)(a) or (b)” substitute “ the relevant disposal value ”.

3

For subsections (4) to (4D) substitute—

4

“Relevant disposal value” means—

a

in relation to a long funding finance lease, the disposal value described in item 5A of the table in section 61(2) of the Capital Allowances Act (disposal values), and

b

in relation to a long funding operating lease, the disposal value described in item 5B of that table.

4

In subsection (5), omit “ “market value”,”.

4

Accordingly, in FA 2008, in Schedule 20, omit paragraph 5.

5

1

The amendments made by paragraphs 1 and 2 have effect in relation to leases whose inception is on or after 13 November 2008.

2

The amendments made by paragraphs 3 and 4 have effect in relation to leases whose inception is on or after 22 April 2009.