Sale and leaseback query

Sale and leaseback query

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Client sold a car and leased it back immediately for the same price (say £20,000). Lease agreement is for 4 years at £250/ month with a residual value of £8,000. Under FRS 5 in the accounts I think I have to treat the sales proceeds of £20,000 as a lease creditor, and the car stays in the balance sheet.

I am unsure however how to calculate the correct tax relief available. Is it simply calculated with regard to the monthly lease payments or is it based on the rate of depreciation (25% reducing balance). Any assistance would be greatly appreciated.
Motor mouth

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