Finance lease rentals: SSAP 21 rules ok?

Article Abstract:

Standard Statement of Accounting Practices (SSAP) 21, entitled 'Accounting for Leases and Hire Purchase Contracts,' introduces significant changes in the accounting and tax treatment of finance leases when linked to the tax relief rules specified for these leases by the Inland Revenue. Finance leases are considered loan fundings for fixed asset purchases based on SSAP 21, consequently serving as the basis for these leases' accounting treatment. Hire purchase contracts are given similar accounting treatment as financial leases. For pure financial leases, lessees are not entitled to capital allowances claims since they never acquire legal title to assets. SSAP 21's prescribed accounting treatment is enforced for allocations of finance leases obtained from Apr 12, 1992 and onwards. Tax deductibility requirements for finance leases are contained in SP 3/91.

Laws, regulations and rules, Tax deductions, Revenue, Lease or buy decisions

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Property disposals 1: trading or investment

Article Abstract:

Land disposals can be treated as either a trading or an investment transaction. Each treatment will have different tax consequences, so it is important to establish the tax treatment of a property disposal during the planning stages. The tax rules applying to a property disposal will decide the tax planning options that can be used. A land disposal typically will be treated as an investment transaction in cases where the land or property has been held for a long period of time. A trading transaction arises from the situation where the land or property was held for a short period of time, work has been carried out to increase the land or property's marketing value, and a number of similar transactions have occurred.

Accounting and auditing, Investments, Sales tax, Property taxes, Property tax, Land value taxation

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VAT and the property developer

Article Abstract:

The British Value Added Tax (VAT) Act 1983 complicates the taxation of property transactions, but developers do have some helpful options. The builder-owner of a building may zero-rate a grant of major interest of the building if the building is considered new construction; this allows input tax to be recovered. Services by the builder are also zero-rated. Other aspects of the law address reverse premiums; landlord contributions to capital expenditures; use of design-and-build contracts; eliminating irrecoverable VAT on fees paid to project managers; and new partial exemption rules.

United Kingdom, Real estate investment, Real estate investments, Real estate development, Value-added tax

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