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HMRC internal manual

Tonnage Tax Manual

Ship leasing: Outline: What is a finance lease?

For tonnage tax purposes ‘finance lease’ has the same meaning as it has for other capital allowance purposes.

Broadly speaking, a lease is a finance lease for tax purposes if, in accordance with normal accountancy practice, it falls to be treated as a finance lease (or as a loan) in the accounts of the lessor. Prior to 19 December 2002 the rules for finance leases were different to the rules on operating leases. From 19 December 2002 the same rules applied to both finance and operating leases.


FA00/SCH22/PARA89(2) (definition for Tonnage Tax) TTM17486