Capital Allowances Act 2001 section 64A

Leased assets: arrangements reducing disposal value of asset

Section 64A is an anti-avoidance provision that prevents taxpayers from using arrangements to artificially reduce the disposal value of leased plant or machinery when a disposal event occurs.

• Where leased plant or machinery is disposed of and a disposal value must be brought into account, any arrangements that artificially reduce that disposal value in connection with lease rentals are to be ignored
• The disposal value must be calculated as though the value-reducing arrangements had never been entered into, thereby restoring the full disposal value
• This rule applies specifically where the reduction in disposal value is attributable to rentals payable under the lease
• The rule does not apply where the arrangements involve a transfer of income streams that has already been taxed as income under the income stream transfer provisions in the Income Tax Act 2007 or the Corporation Tax Act 2010