Corporation Tax Act 2010 section 365

"Starting value" where plant or machinery originally unqualifying

Section 365 determines the "starting value" of plant or machinery for the periodic deduction calculation under section 363, where the lessor originally acquired the asset for purposes other than a qualifying activity before leasing it under a long funding operating lease.

• This section applies where a lessor owns plant or machinery acquired for non-qualifying purposes and then brings it into use for leasing under a long funding operating lease on or after 1 April 2006.
• The starting value for the section 363 deduction calculation is the lower of the asset's market value at the time it is first used for the qualifying activity and its amortised value at that same point.
• The amortised value is calculated by assuming the original acquisition cost, plus any further capital expenditure, has been written off on a straight line basis over the asset's remaining useful economic life.
• Definitions of "qualifying activity", "remaining useful economic life" and writing off on a straight line basis are provided by section 381.