Finance Leasing Manual - FLM2.20

Finance lessee: loan relationships legislation

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 in the same way as 'interest') is not within the corporate debt legislation (see CT 12000).