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In force since 2026-03-18, as the publisher states.
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Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.
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For the purposes of this Chapter a capital sum is any sum of money, or any money's worth, except so far as it or any part of it— (a) is to be treated for corporation tax purposes as a receipt to be taken into account in calculating the profits or losses of a trade, or (b) is (apart from this Chapter) chargeable to corporation tax under or by virtue of any provision to which section 1173 applies (miscellaneous charges).
Propose a change(1) This section applies for the purposes of this Chapter. (2) A lease is (in relation to an asset) an agreement or arrangement under which payments are made for the use of or otherwise in respect of the asset. (3) In particular it includes an agreement or arrangement under which the payments (or any of them) represent instalments of a purchase price or payments towards it.
Propose a changeFor the purposes of this Chapter a relevant asset is any description of property or rights other than land or an interest in land.
Propose a changeFor the purposes of this Chapter each of the following is a deduction by way of relevant tax relief— (a) a deduction in calculating profits or losses of a trade for corporation tax purposes, (b) a deduction in calculating any loss for which relief is given under section 91 (losses from miscellaneous transactions), or in calculating profits or gains chargeable to corporation tax under or by virtue of any provision to which section 1173 applies (miscellaneous charges), (c) a deduction of an amount which for the purposes of section 73 of FA 2012 is an amount of adjusted BLAGAB management expenses of an insurance company for an accounting period, (d) a deduction under section 1219 of CTA 2009 (expenses of management of a company's investment business), (e) a deduction in calculating profits or losses of a trade, profession or vocation for income tax purposes, (f) a deduction in calculating any loss for which relief is allowed under section 152 of ITA 2007 (losses from miscellaneous transactions), or in calculating profits or other income or gains chargeable to income tax under or by virtue of any provision to which section 1016 of that Act applies, and (g) a deduction from earnings allowed under section 336 of ITEPA 2003 (expenses) or allowed in calculating losses in an employment for income tax purposes.
Propose a change(1) The restrictions in section 888 (restrictions on leasing partnership losses) apply if— (a) a company carries on a business in respect of which the company is within the charge to corporation tax, (b) the company carries on the business in partnership with other persons in an accounting period of the partnership, (c) the business (“the leasing business”) is, on any day in that period, a business of leasing plant or machinery, (d) the company incurs a loss in its notional business in any accounting period of the company comprised (wholly or partly) in the accounting period of the partnership, and (e) the interest of the company in the leasing business during the accounting period of the partnership is not determined on an allowable basis (see subsections (2) to (4)). (2) The interest of the company in the leasing business during the accounting period of the partnership is determined on an allowable basis if (and only if) the condition in subsection (3) is met. (3) The condition is that for the purposes of sections 1262 to 1264 of CTA 2009 (allocation of firm's profits between partners)— (a) the company's share in the profits or loss of the leasing business for that period is determined wholly by reference to a single percentage, and (b) the company's share in any relevant capital allowances for that period is determined wholly by reference to the same percentage. (4) For the purposes of subsection (3) “profits” does not include chargeable gains. (5) In this section “business of leasing plant or machinery” has the same meaning as in Chapter 4 of Part 9 (sales of lessors: leasing business carried on by a company in partnership) (see sections 410 to 414). (6) For the meaning of other expressions used in this section or section 888, see section 889.
Propose a change(1) The restrictions in subsections (2) to (4) apply in respect of so much of the loss incurred by the company in its notional business as derives from any relevant capital allowances (“the restricted part of the loss”). (2) Relief is not to be given to the company under any relevant loss relief provision in respect of the restricted part of the loss, except by way of set off against any relevant leasing income. (3) If the leasing business is a trade, relief is not to be given to the company under section 37 or 45A (relief for trade losses against total profits) in respect of the restricted part of the loss. (4) The restricted part of the loss is not available for set off — (a) by way of group relief in accordance with Chapter 2 of Part 5 (surrender of company's losses etc for an accounting period), or (b) by way of group relief for carried-forward losses in accordance with Chapter 2 of Part 5A (surrender of company's carried-forward losses etc.) (5) For the purpose of determining how much of a loss derives from any relevant capital allowances, the loss is to be calculated on the basis that any relevant capital allowances are the final amounts to be deducted. (6) In this section— “the leasing business” has the same meaning as in section 887, “relevant leasing income” means any income of the company's notional business deriving from any lease which— is a lease of plant or machinery, and was entered into before the end of the accounting period of the company in which the loss in the notional business was incurred, and “relevant loss relief provision” means— section 45 (carry forward of pre-1 April 2017 trade loss against subsequent trade profits), section 45B (carry forward of post-1 April 2017 trade loss against subsequent trade profits), section 62 (relief for losses made in UK property business), section 63 (company with investment business ceasing to carry on UK property business), section 66 (relief for losses made in overseas property business), and section 91 (relief for losses from miscellaneous transactions).
Propose a change(1) In this Chapter— “lease” includes an underlease, sublease, tenancy or licence and an agreement for any of those things, “notional business”, in relation to a company, means the business the profits or losses of which are determined, in relation to the company, under section 1259 of CTA 2009 (calculation of firm's profits and losses), “plant or machinery” has the same meaning as in Part 2 of CAA 2001, and “relevant capital allowance” means an allowance under that Part in respect of expenditure incurred on the provision of plant or machinery wholly or partly for the purposes of the leasing business. (2) In this section “the leasing business” has the same meaning as in section 887.
Propose a change(1) This section applies if— (a) there is an unconditional obligation, under a lease of plant or machinery or a relevant arrangement, to make a relevant capital payment at any time, or (b) a relevant capital payment is made under such a lease or arrangement otherwise than in pursuance of such an obligation. (2) The lessor is treated for corporation tax purposes as receiving income attributable to the lease of an amount equal to the amount of the capital payment. (3) If subsection (1)(a) applies, the income is treated as income for the period of account in which there is first an obligation of the kind mentioned there. (4) If subsection (1)(b) applies, the income is treated as income for the period of account in which the capital payment is made. (5) For the meaning of “capital payment” and “relevant capital payment”, see section 893. (6) For the meaning of other expressions used in this Chapter, see section 894.
Propose a change(1) This section applies if section 890 applies in relation to a lease of plant or machinery and other property (see section 894(3)). (2) The relevant capital payment is to be apportioned, on a just and reasonable basis, between— (a) the plant or machinery, and (b) the other property. (3) If any income attributable to any of the plant or machinery and received by the lessor would be chargeable to tax under Chapter 3 of Part 4 of CTA 2009 as profits of a UK property business, that plant or machinery is treated as falling within subsection (2)(b) (and not subsection (2)(a)). (4) Section 890(2) has effect as if the reference to the amount of the capital payment were to such amount as is apportioned under subsection (2) in respect of the plant or machinery within subsection (2)(a).
Propose a change(1) This section applies for corporation tax purposes if— (a) section 890 applies as a result of subsection (1)(a) of that section, and (b) at any time the lessor reasonably expects that the relevant capital payment will not be paid or will not be paid in full. (2) For the purposes of calculating the profits of the lessor, a deduction is allowed for the period of account which includes that time. (3) The amount of the deduction is equal to the amount reasonably expected not to be paid. (4) No other deduction is allowed in respect of the matters mentioned in subsection (1)(b).
Propose a change(1) This section gives the meaning of “capital payment”, “relevant capital payment” and references to payment for the purposes of this Chapter. (2) “Capital payment” means any payment except one which, if made to the lessor— (a) would fall to be included in a calculation of the lessor's income for corporation tax purposes, or (b) would so fall but for section 360 (lessor under long funding finance lease: rental earnings). (3) A capital payment, in relation to a lease or relevant arrangement, is “relevant” if condition A or B is met (but this is subject to subsections (6) and (7)). (4) Condition A is that the capital payment is payable (or paid), directly or indirectly, by or on behalf of the lessee to the lessor or another person on the lessor's behalf in connection with— (a) the grant, assignment, novation or termination of the lease, or (b) any provision of the lease or relevant arrangement (including the variation or waiver of any such provision). (5) Condition B is that rentals payable under the lease are less than, or payable later than, they might reasonably be expected to be if there were no obligation to make the capital payment and it were not made. (6) A capital payment is not “relevant” so far as it— (a) reduces the amount of expenditure incurred by the lessor for the purposes of CAA 2001 in respect of the plant or machinery in question or would reduce it but for section 536 of CAA 2001 (contributions not made by public bodies and not eligible for tax relief), or (b) is compensation for loss resulting from damage to, or damage caused by, the plant or machinery in question. (7) If— (a) a capital payment is an initial payment under a long funding lease for the purposes of Part 2 of CAA 2001 (see section 70YI of that Act), and (b) under section 61 of that Act (disposal events and disposal values) the commencement of the term of the lease (as defined in section 70YI of that Act) is an event that requires the lessor to bring a disposal value into account, the capital payment is only “relevant” so far as it exceeds the amount that is the disposal value for the purposes of Part 2 of that Act. (8) References to payment include the provision of value by any means other than the making of a payment. (9) Accordingly— (a) references to the making of a payment include the passing of value by any other means, and (b) references to the amount of the payment include the value passed.
Propose a change(1) This section applies for the purposes of this Chapter. (2) “Lease” includes— (a) a licence, and (b) the letting of a ship or aircraft on charter or the letting of any other asset on hire, and “lessor” and “lessee” must be read accordingly. (3) “Lease of plant or machinery” includes a lease of plant or machinery and other property, but does not include a lease to which subsection (4) or (5) applies. (4) This subsection applies to a lease if any income attributable to it and received by the lessor would be chargeable to tax under Chapter 3 of Part 4 of CTA 2009 as profits of a UK property business. (5) This subsection applies to a lease of plant or machinery if the lessor has incurred on the plant or machinery what would be qualifying expenditure within the meaning of Part 2 of CAA 2001 but for section 34A of that Act (expenditure on plant or machinery for long funding leasing not qualifying expenditure). (6) “Relevant arrangement” means any agreement or arrangement relating to a lease of plant or machinery, including one made before the lease is entered into or after it has ended. (7) Accordingly, “lessor” and “lessee” include prospective and former lessors and lessees.
Propose a change(1) This section applies where under any arrangements— (a) a company chargeable to corporation tax (C) agrees to take over obligations of another person (D) as lessee under a lease of plant or machinery, (b) as a result of that agreement C, or a person connected with C, becomes entitled to income deductions (whether deductions in calculating income or from total profits), and (c) a payment is payable to C, or a person connected with C, by way of consideration for that agreement. (2) The payment is treated for the purposes of corporation tax as income received by C in the period of account in which C takes over the obligations mentioned in subsection (1)(a). (3) Subsection (2) does not apply if and to the extent that the payment is (apart from this section)— (a) charged to tax on C, or a person connected with C, as an amount of income, (b) brought into account in calculating for tax purposes any income of C or a person connected with C, or (c) brought into account for the purposes of any provision of CAA 2001 as a disposal receipt, or proceeds from a balancing event or disposal event, of C or a person connected with C. (4) It does not matter how C takes over the obligations of D (whether by assignment, novation, variation or replacement of the contract, by operation of law or otherwise). (5) In this section— “arrangements” include any scheme, arrangement, understanding, transaction or series of transactions (whether or not legally enforceable); “lease of plant or machinery” means any kind of agreement or arrangement under which sums are paid for the use of, or otherwise in respect of, plant or machinery; “payment” includes the provision of any benefit, the assumption of any liability or the transfer of money or money's worth (and “payable” is to be construed accordingly); “payment by way of consideration” means any payment made, directly or indirectly, in consequence of or otherwise in connection with, the agreement mentioned in subsection (1)(a), where it is reasonable to assume the agreement would not have been made unless the arrangements included provision for the payment. (6) Any priority rule (other than section 212(1) of FA 2013 (general anti-abuse rule to have priority over other rules)) has effect subject to this section, despite the terms of the priority rule. (7) For that purpose “priority rule” is a rule (however expressed) to the effect that particular provisions have effect to the exclusion of, or otherwise in priority to, anything else. (8) Examples of priority rules are section 464 of CTA 2009 (priority of loan relationships rules) and section 6(1) of TIOPA 2010 (effect to be given to double taxation arrangements despite anything in any enactment).
Propose a change(1) This Part makes provision for corporation tax purposes about the taxation of leasing arrangements. (2) Chapter 2 makes provision in relation to certain arrangements involving the lease of assets where the conditions in section 902 are or have been met, so far as the lease is not regarded as a long funding lease for the purposes of Part 2 of CAA 2001 in accordance with Chapter 6A of that Part (see sections 901 to 904). (3) Chapter 3 makes provision in relation to arrangements involving the lease of assets that are not within Chapter 2, so far as the lease is not so regarded (see sections 925 and 927). (4) The remaining provisions of this Chapter explain some expressions about rent for the purposes of this Part. (5) Chapter 4 contains further provisions supplementing this Part, including more about its interpretation.
Propose a change(1) For the purposes of this Part, the “normal rent” in respect of a lease for a period of account of the lessor (“L”) is the amount specified in subsection (2). (2) That amount is the amount that L would, apart from this Part, bring into account as rent from the lease that arises to L in that period of account for the purpose of determining L's liability to corporation tax for the related accounting period or periods. (3) For the meaning of “related accounting period”, see section 932(4).
Propose a change(1) For the purposes of this Part, the “accountancy rental earnings” in respect of a lease for a period of account of the lessor (“L”) is the greatest of the amounts specified in subsection (2). (2) Those amounts are— (a) the rental earnings for that period in respect of the lease in L's case, (b) the rental earnings for that period in respect of the lease in the case of a person connected with L, and (c) the rental earnings for that period in respect of the lease for the purposes of consolidated group accounts of a group of companies of which L is a member. (3) For the meaning of “the rental earnings”, see section 898.
Propose a change(1) In this Part “the rental earnings” for any period in respect of a lease of an asset in the case of any person or any consolidated group accounts is the amount specified in subsection (2). (2) That amount is the amount that falls for accounting purposes to be treated, in accordance with generally accepted accounting practice, as the gross return for that period on investment in respect of a finance lease or loan in respect of the leasing arrangements. (3) For the meaning of “for accounting purposes”, see section 937.
Propose a change(1) This Chapter applies to arrangements involving the lease of an asset that meet conditions A and B. (2) Condition A is that in accordance with generally accepted accounting practice the arrangements fall to be treated as a finance lease or loan. (3) Condition B is that the effect of the arrangements is that some or all of the return on investment in respect of the finance lease or loan— (a) is or may be in the form of a sum that is not rent, and (b) would not, apart from this Part and Part 11A of ITA 2007, be wholly brought into account for tax purposes as rent from the lease of the asset. (4) It does not matter— (a) when the arrangements are or have been entered into, or (b) whether they are or have been entered into by companies or other persons.
Propose a change(1) This section sets out the main purposes of this Chapter where there are any arrangements to which this Chapter applies. (2) The first main purpose is, in relation to a company entitled to the lessor's interest under the lease of the asset, to apply the charge to corporation tax on income to amounts determined as mentioned in subsections (3) and (4). (3) The amounts referred to in subsection (2) are determined by reference to the amounts that fall for accounting purposes to be treated, in accordance with generally accepted accounting practice, as the income return on and after 26 November 1996 on investment in respect of the finance lease or loan. (4) The amounts referred to in subsection (2) are also determined taking into account the substance of the matter as a whole, including, in particular, the state of affairs— (a) as between connected persons, or (b) within a group of companies, as reflected or falling to be reflected in accounts of any of those persons or in consolidated group accounts. (5) The second main purpose of this Chapter is, if the sum mentioned in section 899(3)(a) that is not rent falls due, to recover by reference to that sum the whole or any part of the capital expenditure reliefs. (6) In subsection (5) “the capital expenditure reliefs” means any reliefs, allowances or deductions that are or have been allowed or made in respect of capital expenditure incurred in respect of the leased asset.
Propose a change(1) This Chapter applies if— (a) a lease of an asset is or has been granted, and (b) the conditions in section 902 are or have been met in relation to the lease at some time in a period of account of the current lessor. (2) But this Chapter does not apply so far as, in relation to the current lessor, the lease falls to be regarded as a long funding lease for the purposes of Part 2 of CAA 2001 (plant and machinery allowances) in accordance with Chapter 6A of that Part (interpretation of provisions about long funding leases) (see section 70G of that Act). (3) If the conditions in section 902 have been met at some time in a period of account of the person who was at that time the lessor, they are taken to continue to be met for the purposes of this Chapter unless and until one of the conditions in subsection (4) is met. (4) The conditions are that— (a) the asset ceases to be leased under the lease, or (b) the lessor's interest under the lease is assigned to a person who is not connected with any of the persons specified in subsection (5). (5) Those persons are— (a) the assignor, (b) any person who was the lessor at some time before the assignment, and (c) any person who at some time after the assignment becomes the lessor pursuant to arrangements made by a person who was the lessor, or was connected with the lessor, at some time before the assignment. (6) If at any time the person who was the lessor at that time was a person within the charge to income tax, the reference in subsection (3) to the conditions in section 902 having been met at that time includes a reference to the conditions in section 614BC of ITA 2007 having been so met. (7) Nothing in subsection (3) prevents this Chapter from applying again in relation to the lease where the lessor's interest is assigned if the conditions for its application are met after the assignment.
Propose a change(1) This section sets out the conditions required by section 901(1) to be met for this Chapter to apply (conditions A to E). (2) Condition A is that at the relevant time— (a) the leasing arrangements fall for accounting purposes to be treated, in accordance with generally accepted accounting practice, as a finance lease or a loan, and (b) subsection (3) or (4) applies. (3) This subsection applies if the lessor (“L”), or a person connected with L, falls for accounting purposes to be treated, in accordance with generally accepted accounting practice, as the finance lessor in relation to the finance lease or loan. (4) This subsection applies if the finance lease or loan falls for accounting purposes to be treated, in accordance with generally accepted accounting practice, as subsisting for the purposes of consolidated group accounts of a group of companies of which L is a member. (5) Condition B is that, under the leasing arrangements, there is or may be payable to L, or to a person connected with L, a sum (a “major lump sum”) that is not rent but falls for accounting purposes to be treated, in accordance with generally accepted accounting practice— (a) as to part, as repayment of some or all of the investment in respect of a finance lease or loan, and (b) as to part, as a return on investment in respect of a finance lease or loan. (6) Condition C is that not all of that part of the sum that falls within subsection (5)(b) would, apart from this Chapter, fall to be brought into account for corporation tax purposes in accounting periods of L ending with the relevant accounting period as the normal rent from the lease for periods of account of L. (7) Condition D is that, in relation to L at the relevant time— (a) the period of account of L in which the relevant time falls, or (b) an earlier period of account of L during which L was the lessor, is a period of account for which the accountancy rental earnings in respect of the lease exceed the normal rent for the period. (8) Condition E is that at the relevant time— (a) arrangements within section 904(1) exist, or (b) paragraph (a) does not apply and circumstances within section 904(3) exist. (9) Section 903 supplements this section.
Propose a change(1) In section 902— “the relevant accounting period”, in relation to a major lump sum, means— the accounting period of the lessor (“L”) which is related to L's period of account in which the major lump sum is or may be payable in accordance with the leasing arrangements, or if there are two or more such accounting periods, the latest of them, and “the relevant time” means the time as at which it must be determined for the purposes of section 901(1) or (3) whether the conditions in section 902 are or, as the case may be, were met. (2) For the meaning of an accounting period being related to a period of account, see section 932(4). (3) Subsection (4) applies for determining the normal rent for a period of account for the purpose of determining whether condition D in section 902 is met as respects L unless subsection (5) applies. (4) Rent that falls to be brought into account for corporation tax purposes as it falls due is treated— (a) as accruing evenly throughout the period to which, in accordance with the terms of the lease, each payment falling due relates, and (b) as falling due as it so accrues. (5) This subsection applies if any such payment as is mentioned in subsection (4)(a) falls due more than 12 months after the time at which any of the rent to which that payment relates is treated as accruing under subsection (4)(a).
Propose a change(1) The arrangements referred to in section 902(8)(a) are arrangements under which— (a) the lessee or a person connected with the lessee may acquire, whether directly or indirectly, the leased asset or an asset representing the leased asset from the lessor or a person connected with the lessor, and (b) in connection with that acquisition, the lessor or a person connected with the lessor may receive, whether directly or indirectly, a qualifying lump sum from the lessee or a person connected with the lessee. (2) In this section “qualifying lump sum” means any sum that is not rent but at least part of which would fall for accounting purposes to be treated, in accordance with generally accepted accounting practice, as a return on investment in respect of a finance lease or loan. (3) The circumstances referred to in section 902(8)(b) are circumstances which make it more likely— (a) that the events described in subsection (4) will occur, than (b) that the event described in subsection (5) will occur. (4) The events mentioned in subsection (3)(a) are— (a) that the lessee or a person connected with the lessee will acquire, whether directly or indirectly, the leased asset or an asset representing the leased asset from the lessor or a person connected with the lessor, and (b) that, in connection with that acquisition, the lessor or a person connected with the lessor will receive, whether directly or indirectly, a qualifying lump sum from the lessee or a person connected with the lessee. (5) The event mentioned in subsection (3)(b) is that, before any such acquisition as is mentioned in subsection (4) takes place, the leased asset or, as the case may be, the asset representing the leased asset, will have been acquired, in a sale on the open market, by an independent third party. (6) In subsection (5) “independent third party” means a person who— (a) is not the lessor or the lessee, and (b) is not connected with either of them. (7) For the meaning of an asset representing the leased asset, see section 934.
Propose a change(1) This section applies if, in the case of any period of account of the current lessor (“L”)— (a) this Chapter applies in relation to the lease, and (b) the accountancy rental earnings in respect of the lease for that period of account exceed the normal rent for that period. (2) For corporation tax purposes, L is treated as if in that period of account L had been entitled to, and there had arisen to L, rent from the lease of an amount equal to those accountancy rental earnings (instead of the normal rent referred to in subsection (1)(b)). (3) Such rent from the lease of an asset is treated for corporation tax purposes— (a) as if it had accrued at an even rate throughout so much of the period of account as falls within the period for which the asset is leased, and (b) as if L had become entitled to it as it accrued.
Propose a change(1) This section and sections 907 to 910 provide for reductions of the taxable rent of a current lessor (“L”) under a lease to which this Chapter applies. (2) In this section and sections 907 to 910 “taxable rent”, in relation to a period of account of L, means the amount that would, apart from those sections, be treated for corporation tax purposes as rent from the lease that arises to L in that period of account for the purpose of determining L's liability to tax for the related accounting period or periods. (3) The reductions of taxable rent under sections 907 to 910 depend on there being— (a) a cumulative accountancy rental excess for the period of account of L in question, or (b) a cumulative normal rental excess for the period of account of L in question. (4) For the meaning of “cumulative accountancy rental excess” and “cumulative normal rental excess”, see sections 907 and 909 respectively.
Propose a change(1) For the purposes of this Chapter, there is an “accountancy rental excess” in relation to the lease for a period of account of the current lessor (“L”) if the taxable rent in relation to the lease for the period is as a result of section 905 (current lessor taxed by reference to accountancy rental earnings) an amount equal to the accountancy rental earnings. (2) The amount of the accountancy rental excess for the period is equal to the difference between the accountancy rental earnings for the period and the normal rent for the period. (3) But if the taxable rent for the period is reduced under section 910 (reduction of taxable rent by the cumulative normal rental excess), there is only an accountancy rental excess for the period if— (a) the accountancy rental earnings, reduced by an amount equal to the reduction under that section, exceed (b) the normal rent. (4) And in that case the amount of the accountancy rental excess for the period is equal to that excess. (5) In this Chapter the “cumulative accountancy rental excess”, in relation to the lease and a period of account of L, means so much of the total of the accountancy rental excesses for previous periods of account of L (as increased under section 912: recovery of bad debts following reduction under section 911) as has not been— (a) set off under section 908 (reduction of taxable rent by the cumulative accountancy rental excess) against the taxable rent for any such previous period, (b) reduced under section 911 (relief for bad debts: reduction of cumulative accountancy rental excess), or (c) set off under section 37A of TCGA 1992 (consideration on disposal of certain leases) against the consideration for a disposal.
Propose a change(1) This section applies if a period of account of the current lessor (“L”) is one for which— (a) the normal rent in relation to the lease exceeds the accountancy rental earnings, and (b) there is a cumulative accountancy rental excess. (2) The taxable rent for the period of account is reduced by setting against it the cumulative accountancy rental excess (but not so as to reduce that rent below the amount of the accountancy rental earnings). (3) But see section 911(3) and (4) (under which the amount of the cumulative accountancy rental excess which may be set against the taxable rent is limited in some circumstances).
Propose a change(1) For the purposes of this Chapter, there is a “normal rental excess” in relation to a lease for any period of account of the current lessor (“L”) throughout which the leasing arrangements fall for accounting purposes to be treated, in accordance with generally accepted accounting practice, as a finance lease or loan if— (a) the normal rent for the period, exceeds (b) the accountancy rental earnings for the period. (2) The amount of the normal rental excess for that period is equal to that excess. (3) But if the taxable rent for the period is reduced under section 908 (reduction of taxable rent by the cumulative accountancy rental excess), there is only a normal rental excess for the period if— (a) the normal rent, reduced by an amount equal to the reduction under that section, exceeds (b) the accountancy rental earnings. (4) And in that case the amount of the normal rental excess for the period is equal to that excess. (5) In this Chapter “cumulative normal rental excess”, in relation to the lease and a period of account of L, means so much of the total of the normal rental excesses for previous periods of account of L (as increased under section 914: recovery of bad debts following reduction under section 913) as has not been— (a) set off under section 910 (reduction of taxable rent by the cumulative normal rental excess) against the taxable rent for any such previous period, or (b) reduced under section 913 (relief for bad debts: reduction of cumulative normal rental excess).
Propose a change(1) This section applies if a period of account of the current lessor (“L”) is one for which— (a) the taxable rent in relation to the lease is as a result of section 905 (current lessor taxed by reference to accountancy rental earnings) an amount equal to the accountancy rental earnings, and (b) there is a cumulative normal rental excess. (2) The taxable rent for the period of account is reduced by setting against it the cumulative normal rental excess (but not so as to reduce that rent below the amount of the normal rent). (3) But see section 913(3) and (4) (under which the amount of the cumulative normal rental excess which may be set against the taxable rent is limited in some circumstances).
Propose a change(1) This section applies if in relation to the lease for any period of account of the current lessor— (a) there is a cumulative accountancy rental excess, and (b) a bad debt deduction falls to be made in respect of rent from the lease. (2) If for that period— (a) the accountancy rental earnings in relation to the lease exceed the normal rent, and (b) the amount of the bad debt deduction exceeds the amount of the accountancy rental earnings, the cumulative accountancy rental excess for that period is reduced by the amount of the excess of that deduction over those earnings (but not so as to reduce the amount of that rental excess below nil). (3) Subsections (4) and (5) apply if for that period the accountancy rental earnings in relation to the lease do not exceed the normal rent. (4) The amount of the cumulative accountancy rental excess that may be set against the taxable rent for that period under section 908(2) (reduction of taxable rent by the cumulative accountancy rental excess) is limited to the amount (if any) by which the normal rent exceeds the bad debt deduction. (5) If for that period the bad debt deduction exceeds the normal rent, the cumulative accountancy rental excess for that period is reduced by the amount of that excess (but not so as to reduce the amount of that rental excess below nil). (6) In this section— “bad debt deduction”, in relation to a period of account of the lessor, means the total of the deductions falling to be made for accounting purposes for that period by way of impairment loss in respect of rents from the lease of the asset, and “taxable rent” has the meaning given in section 906(2).
Propose a change(1) This section applies if in relation to the lease— (a) the cumulative accountancy rental excess for any period of account of the current lessor (“L”) has been reduced under section 911(2) or (5) because of a bad debt deduction, (b) in a subsequent period of account of L, an amount (“the relevant credit”) is recovered or credited in respect of the amount which constituted the bad debt deduction, and (c) there is a cumulative accountancy rental excess for that subsequent period. (2) The cumulative accountancy rental excess for the subsequent period is increased. (3) If the relevant credit does not exceed the total of the reductions under section 911(2) or (5), the increase is by the relevant credit. (4) Otherwise, the increase is limited to that total. (5) In this section “bad debt deduction” has the meaning given in section 911(6).
Propose a change(1) This section applies if in relation to the lease for any period of account of the current lessor— (a) there is a cumulative normal rental excess, and (b) a bad debt deduction falls to be made in respect of rent from the lease. (2) If for that period— (a) the accountancy rental earnings in the case of the lease do not exceed the normal rent, and (b) the amount of the bad debt deduction exceeds the amount of that rent, the cumulative normal rental excess for that period is reduced by the amount of the excess of that deduction over that rent (but not so as to reduce the amount of that rental excess below nil). (3) Subsections (4) and (5) apply if for that period the accountancy rental earnings in relation to the lease exceed the normal rent. (4) The amount of the cumulative normal rental excess that may be set against the taxable rent for that period under section 910 (reduction of taxable rent by the cumulative normal rental excess) is limited to the amount (if any) by which the accountancy rental earnings exceed the bad debt deduction. (5) If for that period the bad debt deduction exceeds the accountancy rental earnings, the cumulative normal rental excess for that period is reduced by the amount of the excess (but not so as to reduce the amount of that rental excess below nil). (6) In this section, in relation to a period of account of the lessor— “bad debt deduction” has the meaning given in section 911(6), and “taxable rent” has the meaning given in section 906(2).
Propose a change(1) This section applies if in relation to the lease— (a) the cumulative normal rental excess for any period of account of the current lessor (“L”) has been reduced under section 913(2) or (5) as a result of a bad debt deduction, (b) in a subsequent period of account of L, an amount (“the relevant credit”) is recovered or credited in respect of the amount which constituted the bad debt deduction, and (c) there is a cumulative normal rental excess for that subsequent period. (2) The cumulative normal rental excess for the subsequent period is increased. (3) If the relevant credit does not exceed the total of the reductions under section 913(2) or (5), the increase is by the relevant credit. (4) Otherwise, the increase is limited to that total. (5) In this section “bad debt deduction” has the meaning given in section 911(6).
Propose a change(1) This section applies if the current lessor (“L”) or a person connected with L disposes of— (a) the lessor's interest under the lease, (b) the leased asset, or (c) an asset representing the leased asset (see section 934). (2) This Part has effect as if immediately before the disposal a period of account of L ended and another began. (3) If— (a) two or more disposals within subsection (1) are made at the same time, and (b) there is any cumulative accountancy rental excess for any period of account of L in which the disposal occurs, subsection (2) has effect in relation to those disposals as if they together constituted a single disposal. (4) In this section “dispose” and “disposal” are to be read in accordance with TCGA 1992. (5) In cases where there is any cumulative accountancy rental excess for L's period of account in which the disposal occurs, section 37A of that Act (consideration on disposal of certain leases) makes provision for the purposes of that Act about the reduction of the consideration for the disposal by that excess in determining if a gain has accrued.
Propose a change(1) This section applies if— (a) the current lessor (“L”) assigns the lessor's interest under the lease, and (b) the assignment is a disposal on which, as a result of any of the no gain/no loss provisions, neither a gain nor a loss accrues. (2) This Part has effect as if— (a) a period of account of L (“L's period”) ended with the assignment, and (b) a period of account of the assignee (“A's period”) began with the assignment. (3) Any cumulative accountancy rental excess for L's period becomes the cumulative accountancy rental excess for A's period. (4) Any cumulative normal rental excess for L's period becomes the cumulative normal rental excess for A's period. (5) If the assignee is a person subject to income tax, so far as this section relates to the assignee, it applies for the purposes of Part 11A of ITA 2007 as it would otherwise apply for the purposes of this Part. (6) In this section “the no gain/no loss provisions” has the same meaning as in TCGA 1992 (see section 288(3A) of that Act).
Propose a change(1) This section and sections 918 to 922 apply if an occasion occurs on which a major lump sum falls to be paid in relation to the lease of the asset. (2) In those sections the occasion is called “the relevant occasion”.
Propose a change(1) This section applies if capital expenditure incurred by the current lessor (“L”) in respect of the leased asset is or has been taken into account for the purposes of any allowance or charge under— (a) Part 2 of CAA 2001 (plant and machinery allowances), (b) Part 5 of that Act (mineral extraction allowances), or (c) Part 8 of that Act (patent allowances). (2) The Part of that Act in question (“the relevant Part”) has effect as if the relevant occasion were an event (“the relevant event”) as a result of which a disposal value is to be brought into account of an amount equal to the amount or value of the major lump sum (but subject to any applicable limiting provision). (3) In this section “limiting provision” means a provision to the effect that the disposal value of the asset in question is not to exceed an amount (“the limit”) described by reference to capital expenditure incurred in respect of the asset. (4) Subsection (5) applies if— (a) as a result of subsection (2), a disposal value (“the relevant disposal value”) falls or has fallen to be brought into account by a person in respect of the leased asset for the purposes of the relevant Part, and (b) a limiting provision has effect in the case of that Part. (5) The limiting provision has effect (so far as it would not otherwise do so), in relation to the relevant disposal value and any simultaneous or later disposal value, as if— (a) it did not limit any particular disposal value, but (b) it limited the total amount of all the disposal values brought into account for the purposes of the relevant Part by L in respect of the leased asset. (6) In subsection (5) “simultaneous or later disposal value” means any disposal value which falls to be brought into account by L in respect of the leased asset as a result of any event occurring at the same time as, or later than, the relevant event.
Propose a change(1) This section applies if any allowance is or has been given in respect of capital expenditure incurred by the current lessor (“L”) in respect of the leased asset under any provision of CAA 2001 other than— (a) Part 2 of CAA 2001 (plant and machinery allowances), (b) Part 5 of that Act (mineral extraction allowances), or (c) Part 8 of that Act (patent allowances). (2) The amount specified in subsection (3) is treated, in relation to L, as if it were a balancing charge to be made on L for the chargeable period in which the relevant occasion falls. (3) That amount is an amount equal to— (a) the total of the allowances given as mentioned in subsection (1) (so far as not previously recovered or withdrawn), or (b) if it is less, the amount or value of the major lump sum. (4) In this section “chargeable period” has the meaning given by section 6 of CAA 2001.
Propose a change(1) This section applies if any deduction is or has been allowed to the current lessor (“L”) in respect of capital expenditure incurred in connection with the leased asset as a result of— (a) section 142 or 145 of CTA 2009 (preparation and restoration expenditure in relation to waste disposal site), or (b) section 147 of that Act (cemeteries and memorial gardens: deduction for capital expenditure). (2) L is treated as if trading receipts arose to L from the trade in question on the relevant occasion. (3) The amount of those receipts is equal to the lesser of— (a) the amount or value of the major lump sum, and (b) the deductions previously allowed.
Propose a change(1) This section applies if— (a) any relevant film deduction has been allowed to the current lessor (“L”) in respect of expenditure incurred in connection with the leased asset, and (b) the amount or value of the major lump sum exceeds so much of that sum as was treated as receipts of a revenue nature under section 40A(2) of F(No.2)A 1992 (disposal proceeds of original master version of film treated as receipt of a revenue nature). (2) In subsection (1) “relevant film deduction” means any deduction as a result of— (a) section 40B(1) of F(No.2)A 1992 (allocation of expenditure on master versions of films to periods), or (b) section 42 of that Act (relief for production or acquisition expenditure in respect of films). (3) L is treated as if receipts of a revenue nature arose to L from the trade or business in question on the relevant occasion. (4) The amount of those receipts is equal to the excess mentioned in subsection (1)(b).
Propose a change