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HMRC internal manual

Business Income Manual

Leasing: avoidance: assets other than land: leased trading assets

S681C-S681CG Income Tax Act 2007, S863-S869 Corporation Tax Act 2010

Anti-avoidance legislation (the leased trading assets legislation) applies where a person, carrying on a trade (including a profession or vocation) makes payments under a lease of an asset other than land or buildings (as to which see BIM61300 onwards) and at any time before the lease was created the asset was used either:

  • in that trade,


  • in another trade carried on by the person who then or later was carrying on the first trade,

and when so used was owned by the person carrying on the trade in which it was used.

Where the legislation applies, in computing the profits and gains of the trade the deduction in respect of a payment under the lease must not exceed the commercial rent of the asset for the period for which the payment is made (see BIM61245). See BIM61250 for the calculation rules.

The legislation does not apply to leases created on or before 14 April 1964 or to payments under long funding finance leases.

Asset and lease have the same meanings as at BIM61215.