BLM00510 - 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.

In certain cases, the deduction for the cost of hiring a car which can be made in calculating the profits of a trade is restricted. A 15% restriction applies to cars with CO2 emissions over certain levels. For leases on cars costing more than £12,000 and entered into before 1 April 2009 for companies and before 6 April 2009 for individuals, the deductions were also restricted, see BIM47714.

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).