Corporation Tax Act 2010 section 421

The amount of the income: the basic amount

Section 421 sets out how to calculate the basic amount of income that arises when there is a qualifying change in a partner company's interest in a partnership leasing business involving plant or machinery.

• The basic amount of income is calculated using the formula PM minus TWDV, where PM represents the market value of the plant or machinery and TWDV represents the total tax written-down value of that plant or machinery across all capital allowances pools
• TWDV is determined by assuming the partnership's chargeable period ends on the day of the qualifying change (the relevant day) and a new period starts the next day, then totalling unrelieved qualifying expenditure carried forward across single asset pools, class pools, and the main pool
• Expenditure on plant or machinery acquired on the relevant day is excluded from TWDV, unless the asset was acquired from a qualifying company — this ensures consistent treatment of assets transferred between connected parties within the arrangement
• Once the basic amount has been calculated, it must be adjusted in accordance with further provisions to arrive at the final income figure attributed to the partner company