Corporation Tax Act 2010 section 367

Determination of remaining residual value resulting from lessor's first additional expenditure

Section 367 sets out how to determine the remaining residual value (RRV) of leased plant or machinery when a lessor incurs additional expenditure for the first time on that asset, for the purposes of the calculation in section 366(4).

• RRV is calculated by comparing two figures: the expected residual value at the time of the additional expenditure (ARV) and the expected residual value at the start of the lease (CRV).
• If ARV exceeds CRV, the RRV is the portion of that excess that is attributable to the additional expenditure.
• If ARV does not exceed CRV, the RRV is nil.
• This calculation only applies where the lessor has not previously incurred any other additional expenditure on the same leased plant or machinery under section 366.