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HMRC internal manual

Business Leasing Manual

HM Revenue & Customs
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‘Income-into-capital’ schemes and back loaded leases: Definition of a Chapter 2 of Part 21 of CTA 2010 lease: Condition D: ‘accountancy rental earnings' must exceed 'normal rent'

The condition in CTA10/S902(7) is aimed at excluding leases where the income from a finance lease shown in the accounts drawn up under GAAP, the ‘accountancy rental earnings’, is taxed year by year. Since the GAAP income will represent the full amount of the ‘interest’ on the ‘loan’ as it accrues there is, in these circumstances, no scope for turning income into capital.