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Leasing consultation – an update
Leasing consultation – an update
The expected follow-up consultation on leasing taxation will be delayed until the Autumn.
Highlights
A leasing discussion document was released by HMRC last summer which discussed possible tax responses to the new lease accounting standard IFRS 16. Following this consultation, the Government announced at Spring Budget 2017 that they intended to maintain the current system of lease taxation. The other options for more radical reform were therefore rejected, with the Government proposing to make legislative changes that would broadly maintain the current system of lease taxation. A further detailed consultation on lease taxation was also announced, to take place in Summer 2017. We now understand that, due to the snap general election, the expected issue date for the consultation has been pushed back to Autumn 2017.
We further understand that the consultation is likely to include the following points:
- The same set of leasing tax rules will apply, regardless of whether or not the entity will use IFRS 16;
- Where the legislation operates by reference to a finance lease, the definition of a finance lease will be streamlined;
- The long funding lease regime will continue; and
- The legislation will be amended to deal with additional capital expenditure on assets incurred by lessees.
We expect the timetable will involve draft leasing legislation being included in Finance Bill 2018 ready for a commencement date of 1 January 2019, from which date IFRS 16 will apply.
For further information please contact:
