Lease taxation under IFRS 16 – part 1

The introduction of the new IFRS 16 Leases effective for accounting periods from 1 January 2019 will have a radical effect on the taxation treatment under the revised accounting rules. Although the final HMRC approach is still under review, the changes will be significant. Paul Davies, CCH tax writer, considers the key issues in the first of an exclusive two-part series

You are probably aware by now that the introduction of IFRS 16 Leases will radically alter the accounting treatment of leases. As a busy tax practitioner however, you may not have found time to familiarise yourself with all the detail. You also know from practical experience that the taxation of plant and machinery leases gets fairly complicated at the best of times.

If a changing accounting landscape presents an important challenge for tax practitioners, proposals to simultaneously alter the tax rules for plant and machinery leases will complicate matters even further.

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