Finance Leasing Manual - FLM6.25

Who benefits from timing advantages?

In the early days of leasing the lessor could often keep the benefit of any tax advantage, but competition has gradually forced lessors to pass on the benefits to the lessee. This usually takes the form of reduced rentals but is sometimes reflected in the price paid to the lessee in a sale-and-leaseback deal (that is, the capital repayment element in the rentals might be less than the capital price paid to the lessee for the kit).

Further guidance on sale and leaseback transactions is at FLM13.01 onwards.