Corporation Tax Act 2010 section 864

Leased trading assets

Section 864 sets out the conditions that must be met before the restriction on tax deductions for lease payments under this Chapter applies to a company that leases back a trading asset it previously owned.

• A company must make a deductible lease payment for a "relevant asset" used in its trade (Condition A), and either Condition B or Condition C must also be satisfied.
• Condition B applies where the asset was used in the same trade before the lease was created and was owned at that time by the person then carrying on that trade.
• Condition C applies where the asset was previously used in a different trade, profession, or vocation by a person who owned it and who also carried on (at the same time or later) the trade in which the lease payment is now deducted.
• Leases created on or before 14 April 1964 are excluded from this Chapter entirely.