Capital Allowances Act 2001 section 70YG

Termination amount

Section 70YG defines how the "termination amount" is calculated when plant or machinery subject to a long funding lease reaches the end of that lease, with different rules depending on whether there is a disposal event and on the type of lease involved.

• Where the lease ends because of a disposal event (or a disposal event arises from the lease ending), the termination amount is the disposal value the lessor would have had to recognise, assuming the lessor had been entitled to claim capital allowances on the asset all along.
• Where there is no disposal event and the lease is a long funding finance lease, the termination amount is the value at which the plant or machinery appears in the lessor's books or financial records immediately after the lease ends.
• Where there is no disposal event and the lease is a long funding operating lease, the termination amount is simply the market value of the plant or machinery immediately after the lease ends.
• A "plant or machinery disposal event" means any event that would have counted as a disposal event for the lessor if the lessor had been treated as incurring qualifying expenditure and had claimed all available capital allowances.