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Capital Allowances Act 2001
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[F170J“Funding lease”U.K.
This section has no associated Explanatory Notes
(1)A “funding lease” is a plant or machinery lease (see section 70K) which at its inception meets one or more of the following tests—
(a)the finance lease test (see section 70N),
(b)the lease payments test (see section 70O),
(c)the useful economic life test (see section 70P).
[F2(1A)A plant or machinery lease is also a “funding lease” if the plant or machinery is cushion gas.]
(2)[F3Subsections (1) and (1A) are] subject to the following provisions of this section.
(3)A plant or machinery lease is not a funding lease if—
(a)section 67 applies (plant or machinery treated as owned by person entitled to benefit of contract, etc), and
(b)the lease is the contract mentioned in that section.
(4)A plant or machinery lease is not a funding lease if—
(a)before the commencement of the term of the lease, the lessor has leased the plant or machinery under one or more other plant or machinery leases,
(b)in the aggregate, the terms of those other leases exceed 65% of the remaining useful economic life of the plant or machinery at the commencement of the term of the earliest of them, and
(c)none of those earlier leases was a funding lease.
(5)For the purposes of subsection (4), all persons who were lessors of the plant or machinery before 1st April 2006 are to be treated as if they were the same person as the first lessor of the plant or machinery on or after that date.
(6)A plant or machinery lease is not a funding lease in the case of the lessor if—
(a)before 1st April 2006, the plant or machinery had, for a period or periods totalling at least 10 years, been the subject of one or more leases, and
(b)the lessor under the plant or machinery lease was also lessor of the plant or machinery on the last day before 1st April 2006 on which the plant or machinery was the subject of a lease.
[F4(7)In this section “cushion gas” means gas that functions or is intended to function as plant in a particular gas storage facility.]]
Textual Amendments
F1Pt. 2 Ch. 6A inserted (with effect in accordance with Sch. 8 para. 15 of the amending Act) by Finance Act 2006 (c. 25), Sch. 8 para. 7
F2S. 70J(1A) inserted (with effect in accordance with s. 28(8) of the amending Act) by Finance Act 2010 (c. 13), s. 28(3)
F3Words in s. 70J(2) substituted (with effect in accordance with s. 28(8) of the amending Act) by Finance Act 2010 (c. 13), s. 28(4)
F4S. 70J(7) inserted (with effect in accordance with s. 28(8) of the amending Act) by Finance Act 2010 (c. 13), s. 28(5)
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