Section 890 — Corporation Tax Act 2010: Capital payments in respect of leases treated as income

Capital payments in respect of leases treated as income 890 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.