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

Lessee under long funding finance lease: termination

Section 148H prevents double taxation by excluding from the lessee's trading profit calculation any termination payment received under a long funding finance lease that is calculated by reference to the termination value.

• Applies where a person carrying on a trade, profession or vocation is or has been the lessee under a long funding finance lease
• Any payment calculated by reference to termination value and received by the lessee on termination of the lease is excluded from the profit calculation for any period of account
• This exclusion prevents the same economic value being taxed twice — once through capital allowances and again as a trading receipt
• The exclusion does not affect any disposal value that must be brought into account under the Capital Allowances Act 2001