Introduction: Leasing: Lease classification
Accounting Standards classify leases as finance leases or operating leases.
The nature of the asset does not affect the classification of the lease. The characteristics of a finance lease of land are therefore the same as those of a finance lease of plant or machinery.
Lease classification - whether a lease is a finance lease or an operating lease - may be important for tax purposes. An outline of the distinction is at BLM00040 and BLM00045. Further details are at BLM11000 onwards.