BLM51045 | Right-of-use assets: right-of-use asset lessees: taxation of right-of-use asset lessees: early adopters

IFRS 16

Adoption of IFRS 16 became mandatory for accounting periods beginning on or after 1 January 2019, but early adoption was permitted in certain circumstances.

An entity which adopted IFRS16 in a period beginning before 1 January 2019 will have prepared its tax computations for that period, and any following periods which also began before 1 January 2019 on the basis that IFRS 16 had not been adopted. Any accounting entries which arise due to the adoption of IFRS 16 which have an effect on the entity’s computation of profits chargeable to tax must be reversed in the entity’s tax computations.

The tax computations should also include any adjustments necessary to reflect accounting entries which would have been made and flowed through to the computations of profits chargeable to tax, had IFRS 16 not been adopted in those earlier periods.

For accounting periods beginning on or after 1 January 2019, s53 Finance Act 2011 is repealed and the change of basis provisions apply as if IFRS 16 was adopted in that period.

FRS 102 (2024 Amendments)

Adoption of FRS 102 (2024 amendments) is mandatory for accounting periods beginning on or after 1 January 2026, but early adoption is permitted.

As s53, Finance Act 2011 has been repealed, there is no requirement to prepare tax computations in accordance with previous standards when adopting FRS 102 (2024 amendments).