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@06.20. You know your students very well.
馃檪
hello Jhon
If we are leasing, the ownership will be transferred to the company at the end. Why aren’t we taking the effect of allowances of 25% in the lease as well.
Thanks
Because the company leasing the asset will not get capital allowances. Instead, the lease payments reduce the taxable profit and therefore save tax.
Indeed the tax aspect is a bit tricky but well understood. Thank you sir
You are welcome 馃檪
Nkechi is correct – lease payments reduce the taxable profit and therefore result in a tax saving. This is the UK tax position (as per Paper TX).
I really do not understand why in Lease table you account for Tax saving as 30% of lease payment. Is it something usual for Britain? If you lease you have not to pay tax for property, so you should 30% multiply to potential property balance, no?
Tabushew,
That’s a tax saving on the lease payment. Just like you have tax savings on depreciation.
Please explain Bpp practice and revision kit (june18) question number 157
You must ask this sort of things in the Ask the Tutor Forum, and not as a comment on a lecture.