Capital Allowances Act 2001 section 70D

Long funding finance lease: additional expenditure: allowances for lessee

Section 70D deals with how a lessee under a long funding finance lease can claim further capital allowances when the lessor incurs additional expenditure on the leased plant or machinery, resulting in an increase in the present value of the minimum lease payments.

• Where a lessor spends additional money on plant or machinery subject to a long funding finance lease, the lessee may be treated as having incurred further qualifying capital expenditure, provided the spending causes an increase in the present value of the minimum lease payments (ignoring any increase attributable to a relievable amount).
• The further capital expenditure is treated as incurred on the date the increase is first recognised in the lessee's books or other financial records (the "date of first recognition").
• The amount of the further expenditure is the amount that would be recognised as the increase if the lessee prepared accounts in accordance with generally accepted accounting practice as at the date of first recognition.
• If the lease would be treated as a loan under generally accepted accounting practice, it is instead treated as a finance lease for the purposes of this section, and the section must be read together with section 70A.