BLM70205 - Schedule 12 FA 1997:
introduction to 'income-into-capital' schemes: Overview of FA97/Sch
12
FA97/Sch 12 contains rules for determining the tax treatment
of 'income-into-capital' schemes and deferral leases.
- FA97/Sch12/Part I counters
'income-into-capital' leasing schemes whereby finance lessors try
to turn some of their lease rental income into capital receipts. It
applies to leases in existence on 26 November 1996 as well as new
leases. See
BLM70215.
- FA97/Sch12/Part II deals with a possible
deferral of tax liability by means of leases under which rentals
are concentrated towards the end of the lease term. It applies only
to new leases after 26 November 1996. See
BLM70230
In both cases, from 26 November 1996 the minimum rental income
for tax purposes should be the income recognised in lessors'
commercial accounts (the `accountancy rental earnings`). But there
are also provisions intended to ensure that there is no double
taxation of the lessor's total return from the lease (see
BLM72001 onwards).
