Taxation of Chargeable Gains Act 1992 section 25A

Long funding leases of plant or machinery: deemed disposals

Section 25A creates a mechanism of deemed disposals and immediate reacquisitions at the start and end of a long funding lease of plant or machinery, effectively neutralising any chargeable gain or allowable loss during the lease period.

• When plant or machinery is leased under a long funding lease, the lessor is treated as having disposed of and immediately reacquired it at the start of the lease at the relevant disposal value
• At the end of the lease, the lessor is again treated as having disposed of and immediately reacquired the asset for a consideration equal to the termination amount
• The relevant disposal value depends on the type of lease: for long funding finance leases it is derived from item 5A of the disposal values table in the Capital Allowances Act 2001, and for long funding operating leases from item 5B of that table
• Key terms such as "long funding lease", "lessor", "commencement", "termination", and "termination amount" take their meanings from the Capital Allowances Act 2001