Accountants classify leases as finance leases or operating
leases.
The nature of the asset does not affect the classification of
the lease. The characteristics of a finance lease of land are
therefore the same as those of a finance lease of plant or
machinery.
Lease classification – whether a lease is a finance
lease or an operating lease – may be important for tax
purposes. An outline of the distinction is at
BLM00040 and
BLM00045. Further details are at
BLM11000 onwards.
