Finance Leasing Manual - FLM12.50

Purchase options: capital allowances

In some cases the parties may deliberately decide to include a purchase option because they want the lessee to have allowances under Section 60 CAA 1990. This may happen particularly where the lessor is not taxable in the UK and cannot use the capital allowances. Where the lessor is not a UK resident (known as 'inward leasing'), the lease is likely to be drawn up to enable the lessor to claim depreciation allowances in the country where it is taxed. In many instances the inclusion of a 'purchase by lessee' clause would not be fatal to the securing of depreciation allowances in other jurisdictions.