Lease payment for short term tenancy?

Question

I have paid £5000 for 2 yrs lease on a garage that repairs car. Lease to include all machinery and garage, no split. Is it ok to depreciate lease over two yrs,& if so , what entries go on profit&loss a/c & balance sheet.

What happens to capital allowances on tax return & where is lease depreciaction, capital allowance added on tax return.

What if I get notice to quit in 1st year.

Thanks alot.

Answer 1

I think you mean expense, not depreciate.  You need to take the entire $5000 expense in the year it was made, for tax purposes.  Maybe if you use accrual (not cash) you can get around this, but I suspect its going to be an expense in the year you paid, reagardless.

Answer 2

You don't depreciate unless you are the owner.  You just enter the lease payment as a deductible expense of your business.