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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: Capital allowances: restriction on disposal proceeds

Where the leased asset qualifies for machinery and plant capital allowances the major lump sum is taken into account as a ‘disposal value’ (CTA10/S918(1)(a)). This is subject to rules which restrict the disposal value to, essentially, the cost of the asset, see BLM73040.

Similarly, the major lump sum, limited to cost where necessary, is treated as a disposal value in the computation of the following kinds of capital allowance:

  • patent rights (CA75000 onwards)
  • mineral extraction (CA50000 onwards).