Capital Allowances Act 2001 section 70X

Transfers, assignments etc by lessee

Section 70X sets out the rules that apply when a lessee of plant or machinery transfers, assigns, or otherwise disposes of the leased asset to another person who then becomes the new lessee during the term of the lease.

• When a lessee transfers leased plant or machinery to a new lessee, the old lease is treated as terminating immediately before the transfer, and the new lease is treated as commencing immediately after it
• The transfer date is treated as both the inception date and the start of the term of the new lease
• If the new lease runs for the remaining term of the old lease and the payments are the same, the new lease inherits the same classification (long funding or non-long funding) as the old lease
• Where those conditions are met, the lessor is treated as though the old and new leases are a single continuing lease