Where a lease is not a long funding lease a lessor is taxed
on the full amount rentals receivable under the lease, see
BLM33005.
Where the leased asset is plant or machinery the availability
of capital allowances means that, over the life of the lease, the
lessor is taxed on its commercial profit.
As capital allowances are not available to a lessor under a
long funding lease that is recognised in taxing the income.
Conversely, as a long funding lessee is entitled to claim
capital allowances it is necessary to restrict the amount of the
rentals payable which may be deducted in computing profits.
The appropriate rules are set out in
The rules are essentially identical except for the fact that the corporation tax rules have special provisions for insurance companies.
