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HMRC internal manual

Business Leasing Manual

From
HM Revenue & Customs
Updated
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’Income-into-capital’ schemes and back loaded leases: Back loaded leases: deferral of tax leases

Chapter 3 of Part 21 of CTA 2010 is directed at finance leases:

  • entered into (broadly) on or after 26 November 1996,
  • which are not caught by Chapter 2 of Part 21 of CTA 2010, and
  • under which lessors defer tax on ‘interest’ earnings, such as leases with back-loaded rentals.

Existing leases, which would be within Chapter 3 if entered into on or after 26 November 1996, are protected from Chapter 3 as a transitional measure or, in the jargon, ‘grand-fathered’.