BLM71030 - 鈥橧ncome-into-capital鈥� schemes and back loaded leases: 'Income-into-capital' schemes: objectionable features
Prior to FA06, successive Governments allowed finance leasing to enjoy a favourable fiscal r茅gime. Finance lessors were given capital allowances on assets which, in economic and commercial substance, they do not own. 皇冠体育app quid pro quo was that the lessor should pay tax on the 鈥榠nterest鈥� and 鈥榗apital鈥� elements in the lease rentals.
Following FA06, some finance leases (long funding leases) do not qualify for capital allowances.
皇冠体育app 鈥榠ncome-into-capital鈥� schemes avoided tax on both elements of the rentals and arrangements which do this are objectionable. 皇冠体育appy turned deferral into a permanent loss of tax. Although FA97/Sch12 (now Part 21 CTA 2010) stopped some schemes, many more were developed, see the guidance at BLM80000.