CFM97820 - Interest restriction: leasing: long funding operating leases

TIOPA10/S460(1)(a)-(b)

A long funding operating lease is lease of plant or machinery with a term of more than five years which meet tests intended to identify operating leases that serve a financing function. In these cases the lessee can typically obtain capital allowances in respect of the asset rather than the lessor.

Where plant or machinery is leased out under a long funding operating lease, CTA10/S363 provides a reduction in the lessor바카라 사이트™s rental income representing the proportionate reduction in the value of the asset over the period, to reflect the lack of availability of capital allowances to the lessor. Conversely, CTA10/S379 restricts by the same amount the rental expense that the lessee can treat as deductible.

TIOPA10/S460 excludes each of the following when calculating a company바카라 사이트™s adjusted corporation tax earnings when determining a company바카라 사이트™s tax-EBITDA:

  • the amount of a deduction under CTA10/S363 (lessor under long funding operating lease);
  • the amount by which a deduction is reduced under CTA10/S379 (lessee under long funding operating lease);

Further guidance on the taxation of long funding operating leases can be found at BLM41000.