Sale of lessor companies and similar arrangements: partnerships: quantifying the basic income amount
Section 421 CTA2010
The income amount is calculated in two stages, in the same way as for a leasing business carried on by a company on its own account (BLM80510).
The first stage is to identify the ‘basic amount’ by establishing the difference between:
- the accounts value of the plant or machinery (PM), see BLM81075, and
- the tax written down value of the plant or machinery (TWDV), see BLM81080.
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.
The second stage is to adjust the basic amount so that if a partner reduces its interest in the leasing business from (say) 50% to 10% the charge is 40% of the basic amount Guidance on this is at BLM81085.