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The consultation document set out 3 main options for legislative changes required to ensure the Corporate Interest Restriction (CIR) rules in Part 10 Taxation (International and other Provisions) Act 2010 continue to work as intended, following the proposed repeal of section 53 Finance Act 2011 and the introduction of the new lease accounting standard, International Financial Reporting Standard 16 (IFRS 16), with a mandatory implementation date of 1 January 2019.

The government has decided to adopt option 2, but with a modification, which broadly maintains the status quo.

The government is now publishing draft legislation that will require companies adopting IFRS 16, or the equivalent Financial Reporting Standard 101 under UK Generally Accepted Accounting Practice, to continue to classify their leases as either 鈥榝inance leases鈥� or 鈥榦perating leases鈥� for the purposes of CIR.

Comments on the draft legislation can be emailed to us until 31 August 2018.

Legislation is to be included in the next Finance Bill, to be effective from 1 January 2019.

You can read draft legislation and a supporting explanatory note and tax information and impact note.