Finance Leasing Manual - FLM33.05

Cumulative accountancy rental excess

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. This is achieved by the set-off of the excess against taxable rents (under Paragraph 6 Schedule 12 FA1997) and against capital gains disposal proceeds (under Paragraph 12 Schedule 12 FA1997).

The relief is central to the way Schedule 12 operates and excesses need to be tracked for any lease where the measure of taxable rents for any period is accountancy rental earnings, that is where negative depreciation is recognised in the accounts drawn up under SSAP 21.