# Capital Allowances Act 2001, Section 228MB: Calculation of present value


(1) For the purposes of section 228MA the “present value” of an amount is to be calculated by using the interest rate implicit in the lease.
(2) The general rule is that the interest rate implicit in the lease is the interest rate that would apply in accordance with normal commercial criteria, including, in particular, generally accepted accounting practice (where applicable).
(3) If the interest rate implicit in the lease cannot be determined in accordance with subsection (2), it is taken to be the incremental borrowing rate.
(4) For this purpose, the incremental borrowing rate has the same meaning as it has for accounting purposes.
(5) The Treasury may by regulations amend this section for the purpose of replacing references to the incremental borrowing rate with references to another rate.

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Source: https://www.legislation.gov.uk/ukpga/2001/2/section/228MB (the official version)
Page: https://openlegislation.uk/capital-allowances-act-2001/section-228MB
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.