BLM00545 | Introduction: Lease taxation: Finance leases and loan relationship legislation

This manual is being updated to reflect FRS 102 (2024 amendments). For guidance on the tax treatment of accounts prepared under IFRS 16 or the revised FRS 102, please refer to pages within the BLM50000 chapter.

Although a finance lease rental payment can be analysed, for economic and accountancy purposes, into 'interest' and 'capital', for tax purposes it normally constitutes a single revenue item. The 'interest' element (that is, the part of the rental which is accounted for as if it were interest) is not within the loan relationships legislation (see CFM30000).