Accounting for leases – application of IFRS 16

July 2019 update

Debbie Paterson

25 July 2019


International Financial Reporting Standard 16 Leases (IFRS 16) was published in January 2016. It will radically change how lessees account for leases as it removes the distinction between operating and finance leases.

IFRS 16 will be applicable by NHS bodies in 2019/20 and its application will be time consuming. 

This briefing was first published in October 2017, it was then updated in February 2018, June 2018 and March 2019.  This is its fifth update. This update reflects the updated HM Treasury on the application of IFRS 16 to the public sector as well as HM Treasury’s guidance on the budgetary impact of the standard. Amendments have been made in bold, italic. 

The briefing sets out the practical steps NHS bodies should be taking now as well as highlighting the issues that will need to be considered when applying the standard for the first time.

This briefing sets out the basic requirements of the new accounting standard. It provides a summary of the decisions which will have to be made when applying the standard for the first time and it reflects the decisions that HM Treasury is expected to mandate. It also considers where the application of the new standard may be difficult and particular issues NHS bodies may need to consider.

This version of the briefing updates the one published in March 2019 to take account of HM Treasury updated guidance on the application of IFRS 16 to the public sector and the budgetary impact of the standard.

The briefing will be updated as HFMA members discuss the application of the standard and as HM Treasury and the Department of Health and Social Care issue further guidance.


Accounting for leases – application of IFRS 16

July 2019 (PDF 608KB)