The taxation of leased chattels depends principally upon the type of asset being leased, whether the lease is a finance lease or an operating lease, and whether or not it is treated for tax purposes as a long funding lease. Whilst the rules are complex, the tax treatment for most leases mirrors the accounting treatment; however, when taxing plant and machinery leases, long funding leases follow a finance lease model, and non-long funding leases follow an operating lease model. The expiry of a lease will ordinarily not give rise to any UK tax implications, but tax implications may arise where a payment is made at the end of a lease.
