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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.

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»Ê¹ÚÌåÓýapp commencement and transitional rules are contained in FA06/SCH8/PARA15.

As a general rule

• leases that were finalised before 21 July 2005 are outside the scope of the long funding lease regime. This is the case whenever the term of the lease commences.
• any lease that is both finalised and the term of which commenced before 1 April 2006 will also be outside the scope of the long funding lease regime.

»Ê¹ÚÌåÓýappre is, however, an exception to this general rule where the lease was finalised before 21 July 2005 but leased plant or machinery was not in use for a qualifying activity on 1 April 2006 - see BLM20110.

A lease is finalised (FA06/SCH8/PARA23) when all the following conditions are met:

• there is a contract in writing for the lease between the lessor and the lessee
• either (a) the contract is unconditional, or (b) if it is conditional, the conditions have been met
• no terms remain to be agreed.

This is the same definition as ‘inception� (BLM25005).

»Ê¹ÚÌåÓýapp term of a lease commences on the date on and after which the lessee is entitled to use the complete leased asset under the lease (BLM25005).