Corporation Tax Act 2010 section 378

Lessee under long funding finance lease: termination

Section 378 deals with the corporation tax treatment of termination payments received by a lessee under a long funding finance lease, ensuring that such payments are not taxed twice.

• Where a lease terminates and the lessee receives a payment calculated by reference to the termination value, that payment is excluded from the lessee's taxable profits for corporation tax purposes
• This exclusion prevents double taxation, because the same amount must be brought into account as a disposal value for capital allowances purposes under the Capital Allowances Act 2001
• The capital allowances treatment is preserved — the section does not affect any disposal value that the lessee must recognise under the Capital Allowances Act 2001
• The term "termination value" is defined in section 381(3)(m) of the Corporation Tax Act 2010