Taxation (International and Other Provisions) Act 2010 section 460

Long funding operating leases and finance leases

Section 460 explains how certain lease-related amounts are treated when calculating a company's tax-EBITDA and the group-level capital expenditure adjustment under the corporate interest restriction rules.

• When calculating a company's adjusted corporation tax earnings (tax-EBITDA), certain deductions and amounts relating to long funding operating leases and non-long-funding finance leases must be stripped out.
• For long funding operating leases, both the lessor's periodic deduction and the reduction of the lessee's deduction are ignored in the tax-EBITDA calculation.
• For finance leases that are not long funding finance leases, the capital element of the lessor's rental earnings and the depreciation charge on the leased asset in the lessee's accounts are both excluded from tax-EBITDA.
• Depreciation on assets leased under a finance lease to a group member is included in the definition of relevant capital expenditure for the group-EBITDA capital expenditure adjustment.

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