Corporation Tax Act 2010 section 360

Lessor under long funding finance lease: rental earnings

Section 360 determines how the taxable income of a lessor is calculated when it leases plant or machinery under a long funding finance lease.

• The section applies to any company that is the lessor of plant or machinery under a long funding finance lease during a period of account.
• The lessor's taxable income from the lease is the amount of rental earnings for that period, not the full rental payments received.
• Rental earnings are calculated in accordance with generally accepted accounting practice (GAAP) as the gross return on investment for the period in respect of the lease.
• Where GAAP treats the lease as a loan, the portion of rental payments that would be treated as interest is taken as the rental earnings instead.