Taxation of long funding leases: Lessees: Entitlement to capital allowances
Where a lessee under long funding lease carries on a qualifying activity (CA20010) they are treated as
- incurring capital expenditure on the provision of the asset at the commencement of the term of the long funding lease, and
- owning the asset as a result of incurring that expenditure.
As a consequence, they are entitled to claim capital allowances on the capital expenditure they are treated as incurring.
The amount of a long funding lessee’s deemed capital expenditure depends on whether the lease is a long funding finance lease or a long funding operating lease, see BLM42015.