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HMRC internal manual

Business Income Manual

Leasing: avoidance: assets other than land: definitions

S681DC(6)(7), S681DM-S681DO Income Tax Act 2007 (ITA 2010), S873(6)(7), S883-S885 Corporation Tax Act 2010 (CTA 2010)

A capital sum is defined as any sum of money, or money’s worth, except to the extent that it:

  • is to be treated as a receipt in computing the profits of a trade, profession or vocation, or
  • is, apart from the capital sums legislation, chargeable to Income Tax or Corporation Tax as miscellaneous income.

Asset and lease are widely defined; the term lease includes a hire-purchase agreement, as to which there are special provisions in S681DE ITA 2007 and S875 CTA 2010.

The legislation does not apply where the capital sum obtained in respect of the hire-purchaser’s interest in a hire-purchase agreement for plant or machinery is a sum which is required to be brought into the capital allowances computation (as the whole or part of the disposal value of the plant or machinery - see example 3 at BIM61235).