Finance Leasing Manual - FLM11.52

No secondary lease period: where primary period is less than useful life of asset

Where the primary lease period is significantly less than the useful life of the asset, but there is no secondary lease period, the tax treatment of the rentals paid depends on the reasons for the lease being short term. Guidance on the following situations is given at the paragraphs shown below:

• where the lessee does not intend to use the asset for its full useful life - see FLM12.19

• where the asset has a residual value at the end of the primary period - see FLM12.22

• 'full payout' leases - see FLM12.27 onwards

• other situations - see FLM12.39

• leases of fixtures - see FLM12.44.