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HMRC internal manual

Business Leasing Manual

Defining long funding leases: election: eligible leases: asset value not to exceed £10m (SI2007/304 regulation 3 condition G)

The election does not apply to leases where any asset leased under the lease has a market value of more than £10m at the commencement of the lease. For this test it is the value of all assets that is relevant, not just the value of plant or machinery.

Therefore a lessor that has made a long funding lease election may lease a ship with a value of £10m but that particular lease would not be an eligible lease.

If the same lessor leased, under a single lease, 1000 pieces of equipment each with a market value of £20,000, then the lease would be an eligible lease if all the other conditions were met.

If a lessor leased a factory including buildings valued at £15m and plant or machinery valued at £5m the lease would not be an eligible lease.