Income Tax (Trading and Other Income) Act 2005 section 50B

Connected persons: application of section 48

Section 50B prevents the car hire expense restriction from being applied more than once where connected persons are involved in a chain of leases for the same car over the same period, ensuring the restriction applies only to the first commercial lease in the chain.

• Where connected persons each incur expenses on hiring the same car for the same period, and the car hire restriction under section 48 would otherwise apply to more than one of them, this section limits the restriction so it is applied only once
• The section only applies if at least one of the connected persons has hired the car under commercial (arm's length) arrangements — that person is called a "commercial lessee"
• If there is a single commercial lessee, the car hire restriction applies to that lessee's expenses; if there is more than one, it applies to the expenses of the first commercial lessee in the chain of hiring arrangements
• "Commercial arrangements" means arrangements whose terms are such as would reasonably be expected between parties dealing at arm's length, and expenses of a commercial lessee include those incurred in any capacity