HMRC Consultation outcome: Plant and machinery lease accounting changes
Released 6 July 2018
HMRC have published responses to the consultation on tax changes for leasing necessitated by International Financial Reporting Standard (IFRS) 16.
On 1 December 2017, the Government published a consultation on how plant and machinery leasing legislation should be amended to retain its status quo after the adoption of IFRS 16 which it was recognised would result in the rules for the taxation of plant and machinery leases no longer working as intended for any entity that adopted the new standard. The main change upon adoption of IFRS 16 will be for lessees because it will remove the distinction between operating and finance leases. The Government has decided to make a number of changes to the long funding lease regime following the consultation. Draft legislation has been published setting out the changes to the legislation arising from the new accounting standard IFRS 16 which is expected to be included in in the next Finance Bill to be effective for accounting periods beginning on or after 1 January 2019.