Income Tax Act 2007 section 681DB

Payment under lease

Section 681DB sets out one of the conditions (Condition A) that must be met for the sale and lease-back capital sum rules to apply, requiring that a tax-deductible payment is made under a lease of a relevant asset.

• Condition A is met when a payment is made under a lease of a relevant asset and a tax deduction is allowed for that payment.
• Condition A is not met if the payment is already caught by the leased trading assets rules that cap tax deductions at a commercial rent (whether under income tax or corporation tax provisions).
• Condition A is also not met where those leased trading assets rules would have applied but for the payment falling within the long funding finance lease exclusion.
• Leases created on or before 14 April 1964 are excluded entirely — Condition A cannot be met in respect of payments under such leases.