In this comprehensive back to basics article, Robert Harness provides an overview of both the accounting and tax treatment of leased chattels and a summary table of the key differences.
Even seasoned advisers struggle with the taxation of leases and it’s not surprising. The leasing rules represent one of the most complex areas of UK tax legislation even before the extensive ‘special’ requirements – for real property leases fixtures mixed leases manufacturer and dealer leases sale and leaseback transactions overseas leasing and so on – have been considered.
However once the principles behind the legislation are appreciated the general treatment of most chattels’ leases may be readily understood.
I first summarise the accounting principles applicable to lease transactions. For...
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