Capital Allowances Act 2001 section 393V

Provisions applying on termination of lease

Section 393V sets out the rules that apply when a lease of plant or machinery, which has been subject to the long funding lease provisions, comes to an end.

• When a long funding lease terminates, the lessee must bring the plant or machinery out of their capital allowances computation, which may trigger a balancing allowance or balancing charge.
• The disposal value that the lessee brings into account depends on whether the plant or machinery is returned to the lessor, acquired by the lessee, or transferred to another party.
• If the lessee acquires the plant or machinery at the end of the lease, the disposal value is the amount paid (or market value if the transaction is not at arm's length).
• These termination rules were amended by the Finance Act 2012 to ensure they operate correctly within the wider capital allowances framework for long funding leases.

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