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Xenon ltd has included a deduction in its accounting profit of 3200 in respect of the annual leasing cost of a car which has recommended list price of 16000 and CO2 emission of 120 g/km. the lease of the car started on 1st April 2020 and the car has been used for the whole of the 12 month period ended 31 march 2021
when preparing adjusted profit for tax purposes what is the allowable deduction in respect of leasing cost in the year ended 31 march 2021?
my concern: other than renewal of short leases where do we get that 15% applied to the list price as dis-allowable deduction?
You need to look back at your study notes – Chapter 4 deals with the adjustment of trading profits and this specific issue is dealt with in section 2.2 note (i).
The issue about renewal of a short lease applies to property leases and is applicable to the legal and professional costs associated to the renewal of the lease.