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HMRC internal manual

Business Leasing Manual

Calculating the income amount: Calculating the income amount: outline


The income amount is calculated in two stages.

The first stage is to calculate the difference between

  • the accounts value of the plant or machinery (PM), and
  • the tax written down value of the plant or machinery (TWDV)

on the relevant day.

The formula PM - TWDV gives the ‘basic amount’ of the income. The amount is nil when PM is less than TWDV. Further guidance is at BLM80515 onwards.

The second stage is to adjust the basic amount so that if (say) 50% of the shares in a lessor company are sold, the charge is half the basic amount.