Finance Leasing Manual - FLM37.01

Part II Schedule 12: deferral of tax leases

Part II Schedule 12 FA 1997 is directed at finance leases

• entered into (broadly) on or after 26 November 1996

• which are not caught by Part I Schedule 12,

• under which lessors defer tax on 'interest' earnings, such as leases with back-loaded rentals.

Existing leases which would be within Part II if entered into on or after 26 November 1996 are protected from Part II as a transitional measure or, in the jargon, 'grand-fathered'.