Capital Allowances Act 2001 section 70Q

Leases excluded by right of lessor etc to claim capital allowances

Section 70Q explains when a lease is excluded from being a long funding lease for the lessee because the lessor (or a superior lessor in a chain of leases) has the right to claim capital allowances on the leased plant or machinery.

• A lease is not a long funding lease for the lessee if the lessor or any superior lessor is entitled to claim capital allowances on the plant or machinery, was previously entitled, or would have been entitled but for anti-avoidance rules on international leasing.
• The exclusion also applies where the lessor or superior lessor would have met any of these conditions had they been within the charge to UK income tax or corporation tax at the inception of the lease and at any earlier times.
• This exclusion does not apply if the lease's inception was before 28th June 2006 and the lease is not a funding lease for the lessor solely because of the transitional rule in section 70J(6).
• Where the lessor or a superior lessor is non-UK resident and does not prepare accounts under international accounting standards or UK GAAP, any accounting practice questions are resolved by reference to international accounting standards.