Corporation Tax Act 2010 section 398G

Transfers into and out of A

Section 398G deals with how asset transfers into and out of the lessor company ("A") are treated for capital allowances purposes, ensuring that disposal values properly reflect the ascribed value of plant or machinery.

• The normal rules for transferring capital allowances on a change of trade ownership (section 948) do not apply where the lessor company is either the predecessor or the successor in the transfer.
• Where a disposal event occurs, the disposal value that the lessor company must use is the higher of the normal disposal value under the capital allowances rules and the ascribed value of the plant or machinery.
• The normal succession rules for capital allowances under section 265 of the Capital Allowances Act 2001 are overridden by this section where they conflict.
• Where a transfer falls within section 948 or where the lessor company is the predecessor and the succession rules apply, the transfer value is treated as equal to the unencumbered market value of the asset — that is, its value disregarding any leases or other encumbrances.