Finance Leasing Manual - FLM35.17

Capital allowances: restriction on disposal proceeds

Where the leased asset qualifies for machinery and plant capital allowances the major lump sum is taken into account as a 'disposal value' (Paragraph 11(3) Schedule 12 FA 1997). This is subject to rules which restrict the disposal value to, essentially, the cost of the asset, see FLM35.18.

Similarly, the major lump sum, limited to cost where necessary, is treated as a disposal value in the computation of the following kinds of capital allowance:

• patent rights (CA5550)

• mineral extraction (CA3750).