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HMRC internal manual

Business Leasing Manual

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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 E: qualifying lump sum

A ‘qualifying lump sum’ is defined in CTA10/S904(2). It has a meaning which is close to, but not identical with, that of a ‘major lump sum’ in CTA10/S902(5). See BLM70516 onwards for a detailed description of the definition of a major lump sum.

The similarities are that both a ‘qualifying lump sum’ and a ‘major lump sum’:

  • must have excluded from it any sum which is ‘rent’;
  • must contain an amount which, in accordance with GAAP correctly applied, counts as a return on investment in respect of the finance lease (or loan).

The difference is that a ‘major lump sum’ but not a ‘qualifying lump sum’ must also contain an amount which in accordance with GAAP counts as a repayment of that investment. In short a ‘qualifying lump sum’ but not a ‘major lump sum’ may consist solely of return on the investment, in substance interest.