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HMRC internal manual

International Manual

HM Revenue & Customs
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Controlled Foreign Companies: The CFC Charge Gateway Chapter 5 - Non-trading finance profits: What are non-trading finance profits: Finance lease profits


Relevant finance leases are defined at INTM248600. Profits arising on relevant finance leases are included within the definition of non-trading finance profits because in substance some forms of leasing are very similar to secured loan financing. In the main profits on leasing activity will normally be trading finance profits and should therefore fall within the scope of Chapter 6. In some cases however, profits from leasing may be treated as non-trading so the rules allow for non-trading finance leasing profits to fall within the scope of Chapter 5.

A lease for these purposes (which includes part of a lease but excludes actual loan relationships) means an arrangement which;

  • provides for an asset to be leased or otherwise made available by a lessor to another person and, in accordance with GAAP, it falls to be treated in the accounts of the lessor (or connected person) as a finance lease or loan,
  • is one for hire-purchase, conditional sale or other arrangement relating to an asset which does not fall within the above bullet but is of a similar character to an arrangement under the above bullet.