Capital Allowances Act 2001 section 70YE

Minimum lease payments

Section 70YE defines what constitutes "minimum lease payments" for the purposes of the long funding lease provisions, covering how to calculate them and what amounts to include or exclude.

• Minimum lease payments comprise all minimum payments due over the lease term (including any upfront payment), plus any guaranteed residual amount — guaranteed by the lessee (or a connected person) from the lessee's perspective, or guaranteed by the lessee (or a person unconnected to the lessor) from the lessor's perspective.
• Charges for services and qualifying UK or foreign taxes payable by the lessor must be stripped out when calculating the minimum payments.
• Qualifying UK or foreign tax means any tax or duty under UK or overseas law other than income tax, corporation tax, or an equivalent foreign income or corporation tax.
• The residual amount is the fair value of the leased plant or machinery (being its market value less any grants receivable towards its purchase or use) that the lessor cannot reasonably expect to recover from the lease payments.