Policy paper

Income Tax and Corporation Tax response to accounting changes for leasing

This measure amends legislation after the introduction of International Financial Reporting Standard 16 (IFRS 16), a new accounting standard for leasing.

Documents

Draft legislation

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Explanatory note

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Details

This measure makes technical amendments to a number of parts of the tax legislation following the introduction of IFRS 16. In brief, the measure makes technical changes to the following rules:

  • Long Funding Lease rules
  • Corporate Interest Restriction (CIR) rules
  • other rules which make reference to finance leases, included the tax rules for hire purchase contracts, oil activities, Real Estate Investment Trusts (REITs), and the sale of lessors rules

The measure also repeals section 53 of Finance Act (FA) 2011 which required businesses to prepare their tax calculations on the basis of the old accounting treatment. Where this results in a change in the basis of taxation, new rules are introduced to spread the transitional adjustment.

A consultation with a summary of responses for Corporate interest restriction - consultation on leases and plant and machinery lease accounting changes are also available.

Published 6 July 2018