Finance Act, 1973

Cars: provisions as to hire-purchase, etc.

28.—(1) In the case of a vehicle to which this section applies, being a vehicle of which the retail price at the time of the contract in question exceeds £2,500, the following provisions shall have effect.

(2) Where a person, having incurred capital expenditure on the provision of a vehicle to which this section applies under a contract providing that he shall or may become the owner of the vehicle on the performance of the contract, ceases to be entitled to the benefit of the contract without becoming the owner of the vehicle, that expenditure shall, so far as it relates to the vehicle, be left out of account for the purposes of section 241 and Chapters II and V of Part XVI of the Income Tax Act, 1967 , and in determining what amount (if any) is allowable as mentioned in section 26.

(3) Where subsection (2) has effect, all payments made under the contract shall be treated for income tax purposes (including in particular the purposes of section 27) as expenditure incurred on the hiring of the vehicle otherwise than by way of hire-purchase.

(4) Where the person providing the vehicle takes it under a hire-purchase contract, then in apportioning the payments under the contract between capital expenditure incurred on the provision of the vehicle and other expenditure so much of those payments shall be treated as such capital expenditure as is equal to the price which would be chargeable, at the time the contract is entered into, to the person providing the vehicle if he were acquiring it on a sale outright.