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HMRC internal manual

Business Leasing Manual

Defining long funding leases: the three tests: the lease payments test: services and qualifying UK or foreign tax

In calculating the minimum lease payments, you should ignore the part of any payment that represents charges for services or qualifying UK or foreign tax.

‘Services’ are not defined and the term takes its natural meaning.

‘Qualifying UK or foreign tax’ means any tax or duty chargeable under the law of any part of the UK or under the law of any foreign country, other than

  • income tax
  • corporation tax
  • the foreign equivalent of income tax or corporation tax.

As a general rule few, if any, services are provided under a finance lease. Services are more likely to be supplied under an operating lease, though there need not be any.


  • you need to consider the lease payments test, and
  • a proportion of the lease rentals is attributed to services or qualifying UK or foreign tax

it will be necessary to consider very carefully the basis on which an element is attributed to the services. You should refer any cases of doubt or difficulty to CTISA (CT&BIT) for advice.