Taxes Consolidation Act 1997 section 380O

Cars: provisions where hirer becomes owner

Section 380O sets out the tax treatment that applies when a person who has hired a vehicle subsequently becomes its owner.

• Applies where a vehicle has been hired (not under hire-purchase) and the hirer later acquires ownership of it.
• The aggregate of all hire payments and the acquisition payment is apportioned between capital expenditure and hiring expenditure.
• The capital element is capped at the retail price of the vehicle at the time hiring began, and is treated as having been incurred at that time.
• The balance of total payments, after deducting the capital element, is treated as hiring expenditure and is rateably reduced accordingly.