Capital Allowances Act 2001 section 70YA

Change in accountancy classification of long funding lease

Section 70YA deals with what happens for capital allowances purposes when the accountancy classification of a long funding lease changes — for example, from a finance lease to an operating lease or vice versa — and treats the change as if one lease ended and a new one began.

• Where a long funding lease's accounting classification changes (between finance lease, operating lease, or right-of-use lease), the old lease is treated as terminated and a new long funding lease is treated as commencing at the date of the change.
• Three specific cases trigger the section: a finance lease becoming a non-finance lease (Case 1), a non-finance lease becoming a finance lease (Case 2), and a right-of-use finance lease ceasing to be both a right-of-use lease and a finance lease (Case 3).
• The section does not apply where the change in classification results solely from adopting a different accounting standard or from a change to an accounting standard — these are excluded as "relevant changes of classification."
• The Treasury has power to make regulations restricting the application of this section, and references to a finance lease include references to a loan.