Taxation of Chargeable Gains Act 1992 section 41A

Restriction of losses: long funding leases of plant or machinery

Section 41A restricts the allowable loss that can be claimed on the disposal of an asset containing plant or machinery that has been leased out under one or more long funding leases.

• When a person disposes of an asset that includes plant or machinery used for leasing under long funding leases, the allowable loss must be reduced by excluding an amount equal to the fall in value of the plant or machinery during the lease period
• If the plant or machinery was leased under a single long funding lease, the excluded amount is the fall in value during that one lease period
• If the plant or machinery was leased under more than one long funding lease, the excluded amount is the total of the falls in value during each lease period added together
• The fall in value is measured as the difference between the market value of the plant or machinery at the start of the lease term and its market value at the end of the lease