Lease liability

Operating leases used to sit off balance sheet, appearing only as an annual cost. That changed with the FRS 102 periodic review.

Lessees now recognise a right-of-use asset and a corresponding lease liability for most leases, with exemptions for short-term and low-value leases. The effect on a charity renting an office is a bigger balance sheet and a different cost profile.

This applies from the same date as the rest of the 2026 SORP. Build a lease register before transition rather than during it: see building a lease register and transition date.