Section 377 — Corporation Tax Act 2010: Lessee under long funding finance lease: limit on deductions

Lessee under long funding finance lease: limit on deductions 377 1 This section applies if a company is the lessee of any plant or machinery under a long funding finance lease for the whole or part of any period of account.

2 In calculating the company's profits for the period of account for corporation tax purposes, the amount deducted in respect of amounts payable under the lease must not exceed the finance charges.

3 In subsection (2) “ the finance charges ” means the amounts which, in accordance with generally accepted accounting practice, fall (or would fall) to be shown in the company's accounts as finance charges , or interest expenses, in respect of the lease.

4 If the lease is one which, in accordance with such practice, falls (or would fall), to be treated as a loan, subsections (2) and (3) apply as if the lease were one which, in accordance with such practice, fell to be treated as a finance lease.