Capital Allowances Act 2001 section 228E

Lessor's income or profits: termination of leaseback

Section 228E deals with the tax consequences for a lessor when a leaseback arrangement ends, specifically how any income or profits the lessor has received are treated for capital allowances purposes.

• When a sale and leaseback arrangement terminates, the lessor's income or profits from the lease must be considered in calculating the capital allowances position.
• The section ensures that the lessor cannot benefit from capital allowances on an asset where the income stream from the leaseback has come to an end.
• Any relevant income or profits received by the lessor during the leaseback period are taken into account when determining the disposal value of the asset.
• This provision works alongside other sale and leaseback rules to prevent manipulation of capital allowances through the early termination of leaseback arrangements.

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