BLM30215 - Taxation of leases that are not long funding leases: How tax advantages arise: timing differences - lender, a worked example - part 3 of 4

By contrast to the tax consequences for the finance lessor (see BLM30210), where an actual loan is made the lender’s tax computation will look something like this on similar assumptions:

	Year 1	Year 2	Year 3	Year 4	Year 5	Totals
Interest receivable	72	56	40	24	8	200
Less interest payable	58	45	32	19	6	160
Gross profit	14	11	8	5	2	40
Less other expenses	8	4	4	4	0	20
Taxable profit	6	7	4	1	2	20
Tax paid at 30%	2	2	1	0	1	7

In both cases

• the timing of receipts and payments is identical
• the same amount of tax is due from both the lessor and the lender (£7 in each case)

but the tax timing is quite different.