Finance Leasing Manual - FLM11.50

No secondary lease period: back-loading of rentals

Leases with no secondary lease period are sometimes coupled with the back-loading of lease rental payments. The rentals in the early years may be less than the financing costs. If so there may be tax consequences for the lessor under Schedule 12 FA 1997 (see FLM27.01 onwards) which you should draw to the attention of the lessor's district.