Finance Leasing Manual - FLM31.44

Second condition: exclusion of rent

In considering whether a particular sum is a 'major lump sum' any element which is 'rent' is first excluded. That does not prevent the balance from being a major lump sum if it satisfies the other conditions.

'Rent' is not expressly defined in the Schedule but the definition of a lease (see FLM31.08) contains closing words which state that 'rent' shall be construed 'accordingly', that is in accordance with what has gone before. Since the definition of a lease is widely drawn the term 'rent' should also be interpreted widely - to include payments for the hire of an asset, however labelled. For example a 'lease' is defined in terms which include the hire of an intangible on which royalties may be payable; those royalties should be regarded as rent for the purpose of the second condition. But you should resist any suggestion that 'rent' may include a sum which is not a hire payment or which is capital on first principles.