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

Interpretation of Chapter 10A

Section 148J defines key terms used in Chapter 10A, including "qualifying activity", "residual value" and "writing-off period", and explains how amounts are written off on a straight line basis over the relevant period.

• "Qualifying activity" takes its meaning from Part 2 of the Capital Allowances Act 2001, covering the same range of trades, professions and other activities that qualify for capital allowances.
• "Residual value" of plant or machinery under a long funding operating lease is the estimated market value at the end of the lease term, less the estimated costs of disposal.
• Writing off a sum on a straight line basis means apportioning it on a time basis across each period of account in which any part of the writing-off period falls, so that each period bears a proportionate share.
• The wider interpretive rules in Chapter 6A of Part 2 of the Capital Allowances Act 2001, which deal with long funding leases, also apply when reading this Chapter.