Finance Leasing Manual - FLM33.02

avoidance of double taxation: function of the rental excess reliefs

The function of the two reliefs in the scheme of Schedule 12 is different.

• The relief for cumulative accountancy rental excess is intended to ensure that there is no double taxation of the lessor's return from the lease (see FLM33.05).

• The relief for cumulative normal rental excess is of much narrower application. Its purpose is merely to ensure that negative depreciation for a period is not taxed under the Schedule (as part of 'accountancy rental earnings') to the extent that it can be franked by accumulated positive depreciation from earlier periods (see FLM33.33).