Section 379 — Corporation Tax Act 2010: Lessee under long funding operating lease

Lessee under long funding operating lease 379 1 This section applies if a company is the lessee of any plant or machinery under a long funding operating lease for the whole or part of any period of account.

2 The deductions allowed in calculating the profits of the company for the period of account for corporation tax purposes are reduced.

3 The amount of the reduction is so much of the expected gross reduction in value over the term of the lease as is attributable to the period of account.

4 The expected gross reduction in value over the term of the lease is the starting value of the plant or machinery, less its expected end value.

5 For the meaning of “starting value”, see section 380.

6 The expected end value of plant or machinery is the amount which—

a at the commencement of the term of the lease is expected to be its market value at the end of the term, or b if section 380(3) applies, would have been expected to be that value had that value been estimated at the commencement of the term.

7 The expected gross reduction in value over the term of the lease that is attributable to the period of account is found by apportioning that reduction on a time basis according to the proportion of the term of the lease that falls in the period of account.