BLM32225 - Taxation of leases that are not long funding leases: finance lessees: taxation generally: capital/revenue issues, hire purchase and lease purchase agreements
This manual is being updated to reflect FRS 102 (2024 amendments). For guidance on the tax treatment of accounts prepared under IFRS 16 or the revised FRS 102, please refer to pages within the BLM50000 chapter.
If the agreement provides for legal ownership of the asset to pass to the hirer or gives the hirer an option at any point to purchase the asset concerned, the arrangement may be a hire purchase or lease purchase agreement. Under such agreements part of the rental payments may be capital expenditure on the right to purchase the asset.
Guidance about leases with options is at BLM00330 onwards.
Guidance on the capital allowances consequences of hire purchase agreements when the asset is plant or machinery is at CA23300 onwards.