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).