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HMRC internal manual

Business Leasing Manual

HM Revenue & Customs
, see all updates

Introduction: Lease taxation: Lease not Long Funding Lease: Operating lessees

For tax purposes the timing of rental deductions under an operating lease follows the correct application of GAAP.

There is an exception for cars costing more than £12,000, for leases entered into before 1 April 2009 for companies and before 6 April 2009 for individuals in which case the deductions are restricted, see BIM47715.

After those dates there is a similar exception but linked, instead of cost, to the level of CO2 emissions of the car in question, see BIM47725.

Note that different rules may apply if the lease is a long funding lease, see outline at BLM00550 and detail at BLM20000.

Further details on the taxation of operating lessees is at BLM12005 (lease not a long funding lease) and BLM40000 (long funding leases).