Income Tax Act 2007 section 614BS

Cases where expenditure taken into account under Part 2, 5 or 8 of CAA 2001

Section 614BS deals with how capital allowances already claimed by a lessor on a leased asset interact with the requirement to bring a disposal value into account when a major lump sum arises in connection with that asset.

• Where the current lessor has claimed capital allowances (for plant and machinery, mineral extraction, or patents) on the leased asset, the major lump sum triggers a disposal value for capital allowances purposes equal to that lump sum.
• A "limiting provision" caps the disposal value so it cannot exceed the total capital expenditure originally incurred on the asset.
• Where a limiting provision applies, it does not cap any single disposal value individually but instead caps the aggregate of all disposal values the lessor brings into account for that asset under the relevant part of the Capital Allowances Act 2001.
• Any disposal value arising from an event occurring at the same time as, or later than, the triggering event is included in the aggregate total subject to the cap.