Capital Allowances Act 2001 section 219

Meaning of "finance lease"

Section 219 defines what constitutes a "finance lease" for the purposes of the capital allowances rules on lease transactions.

• A finance lease is any arrangement where plant or machinery is leased or made available by one party (the lessor) to another (the lessee), and which would be classified as a finance lease or loan under generally accepted accounting practice
• The accounting classification test is applied by looking at the accounts of the lessor or any person connected with the lessor
• Arrangements that form part of a wider set of arrangements treated as a finance lease or loan also fall within the definition
• For companies, "accounts" includes consolidated group accounts covering two or more companies, provided those accounts are prepared in accordance with generally accepted accounting practice