Finance Leasing Manual - FLM12.09

Lease classification: lease terms

Classification of the lease may also be assisted by other lease terms. The following are indicators that the lease is a finance lease:

• where the agreement refers to implied rates of interest

• where rentals vary with changes in the lessor's tax treatment, for example the rate of corporation tax or capital allowances on the leased asset

• where the lessee is responsible for maintenance and servicing of the leased asset

where the agreement provides for the lessee to receive the benefit of any residual value of the asset.