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HMRC internal manual

Business Leasing Manual

From
HM Revenue & Customs
Updated
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LFLs: commencement and transition: excepted leases: FA06/Sch8/Para 17

In broad terms, the concept of excepted leases allows a transitional period so that existing leases, and leases which were about to commence when the long funding lease regime was announced on 21 July 2005 are not affected by the introduction of the rules for taxing long funding leases.

A lease is an excepted lease if all the following conditions are met:

  • Condition 1: before 21 July 2005 there was a pre-existing heads of agreement (see BLM23035)
  • Condition 2: the leased plant or machinery was under construction before 1 April 2006 (see BLM23065)
  • Condition 3: the lease is finalised (see BLM23010) before 1 April 2007 (or, if certain conditions are met, 1 April 2009 - see BLM23030)
  • Condition 4: the commencement of the lease term (BLM25005) is before 1 April 2007 (or, if certain conditions are met, 1 April 2009 - see BLM23030)
  • Condition 5: the lessee is the person identified as such in the pre-existing heads of agreement
  • Condition 6: the principal terms of the lease are not materially different from those in the pre-existing heads of agreement (see BLM23075).