»Ê¹ÚÌåÓýapp

This manual is being updated to reflect FRS 102 (2024 amendments). For guidance on the tax treatment of accounts prepared under IFRS 16 or the revised FRS 102, please refer to pages within the BLM50000 chapter.

Lease accounting is a complex subject.  »Ê¹ÚÌåÓýapp accounting standards and the accompanying guidance are complex.  Lease accounting also commands much coverage in leasing text books.  »Ê¹ÚÌåÓýapp principal standards are FRS 102 for UK GAAP and IFRS 16 or IAS 17 for IFRS. For further details see BLM10015 onwards.

»Ê¹ÚÌåÓýapp paragraphs that follow do not attempt to repeat all that detail, merely to explain enough to enable you to understand the way in which leasing transactions are presented in accounts.  If the situation is unusual, particularly if it relies on accounting treatment to avoid tax, and you think the accounting treatment may be incorrect, you should seek the advice of your local advisory accountant.

A lessor using IFRS 16 and both lessees and lessors using FRS 102 need to classify leases as either finance or operating leases. »Ê¹ÚÌåÓýapp accounting treatment of leasing differs markedly according to whether the lease is a finance lease or an operating lease.

A lessee using IFRS 16 will not make the distinction between finance or operating lease and therefore the accounting treatment, whilst similar to that of a finance lessee, is different.

In case of difficulty you should seek advice from your local advisory accountant.