Let’s unpick this legislation in more detail:

From 1 January 2026, new lease accounting rules came into force, bringing a major shift in how businesses report their lease arrangements.

At the heart of the change is a simple concept: leases can no longer sit quietly off the balance sheet.

What’s changing?

Most leases including those for property, vehicles, equipment and more will now need to be recognised on the balance sheet. That means recording both a ‘right-of-use’ asset and a corresponding lease liability.

In short, the previous distinction between operating and finance leases for lessees is being removed. For many businesses, this will result in a significant number of new assets and liabilities appearing on the balance sheet for the first time.

There are exemptions

• Low-value leases, such as tablets or office furniture.
• Short-term leases, with a term of 12 months or less.

But outside of these, most lease arrangements will now be subject to the new treatment.

What does this mean in practice?

For many businesses, the most immediate impact will be on financial metrics and internal reporting. You can expect to see:

• Increased total assets and liabilities – as leases hit the balance sheet.
• Higher EBITDA – since lease payments are split between depreciation and interest.
• Shifts in gearing ratios – which could affect debt covenants and funding discussions.
• Changes to net profit – depending on how interest and depreciation are phased.

Crucially, these changes aren’t just for the benefit of accountants they affect how the performance and financial health of a business is understood by lenders, investors, and boards.

Why does this matter?

Transparency. Comparability. Accountability.

By bringing lease obligations onto the balance sheet, the new rules aim to give a clearer picture of a business’s financial position especially its long-term commitments. For stakeholders, it reduces the risk of being blindsided by hidden liabilities. But for finance teams, it adds complexity – and in many cases, may alter the optics of performance.

What should you do now?

This is not just a technical change – it’s a strategic one. Businesses should be:

• Identifying all leases – and assessing which are in scope.
• Modelling the impact – on KPIs, covenants and cashflow.
• Updating systems – to track and account for leases appropriately.
• Briefing boards and stakeholders – so there are no surprises down the line.

At Wilson Partners, we’re already helping clients plan for the transition, assess the impact and update their reporting systems. The earlier you start, the more control you’ll have over how these changes affect your business.

If you’d like to understand how the new lease accounting rules will impact your financials or need support with implementation, get in touch.

Let’s make sure you’re ready.