Income Tax (Trading and Other Income) Act 2005 section 148B

Lessor under long funding finance lease: exceptional items

Section 148B ensures that certain exceptional profits or losses arising to a lessor under a long funding finance lease are brought into the tax computation, even where they would not otherwise be taxable or deductible.

• Applies to any person carrying on a trade who is or has been the lessor under a long funding finance lease
• Catches profits or losses (whether income or capital in nature) connected with the lease that are recognised under GAAP but would not otherwise enter the tax computation
• Treats an exceptional profit as taxable income attributable to the lease, and an exceptional loss as a deductible revenue expense connected with the lease
• Recognition for accounting purposes means appearing in the profit and loss account, the statement of recognised gains and losses or statement of changes in equity, or any other statement used to compute the person's profits or losses for the period