Leases

12 Months Ended

Dec. 31, 2025

Presentation of leases for lessee [abstract]

34. Leases

The Group’s lease portfolio consists of approximately 650 property leases, mainly offices and test centres, together with a number of vehicle and equipment leases. The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets. The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

As a lessee:

The amounts recognised in the income statement are as follows:


All figures in £ millions	Note		2025			2024			2023

Interest on lease liabilities				(20	)		(22	)		(23	)

Expenses relating to short-term leases				–			–			–

Depreciation of right-of-use assets		10		(34	)		(35	)		(39	)

Reversal of impairment/(Impairment) of right-of-use assets		10		6			–			(2	)

In addition, in 2025, depreciation of £4m (2024: £3m, 2023: £2m) and impairment reversals of £11m (2024: impairment £1m, 2023: £nil) were recognised in the income statement in relation to

right-of-use

assets classified as investment property.

Lease liabilities are included within fin

anc

ial

liabilities

– borrowings in the balance sheet, see note 18. The maturities of the Group’s lease liabilities are as follows:


All figures in £ millions	2025		2024

Less than one year		81		85

One to five years		241		270

More than five years		259		276

Total undiscounted lease liabilities		581		631

Lease liabilities included in the balance sheet		478		517

Analysed as:

Current		62		65

Non-current		416		452

The amounts recognised in the cash flow statement are as follows:


All figures in £ millions	2025		2024		2023

Total cash outflow for leases as a lessee		97		100		107

At 31 December 2025, commitments for capital leases contracted for but not yet incurred were £

m (2024: £14m). Extension and termination options and variable lease payments are not significant within the lease portfolio. Short-term leases to which the Group is committed at the balance sheet date are similar to the portfolio of short-term leases to which the short-term lease expense is disclosed above.

As a lessor:

In the event that the Group has excess capacity in its leased offices and warehouses, the Group subleases some of its properties under operating and finance leases.

The amounts recognised in the income statement are as follows:


All figures in £ millions	2025		2024		2023

Interest on lease receivables		3		4		4

Income from subleasing right-of-use assets (within other income)		10		9		6

The amounts recognised in the cash flow statement are as follows:


All figures in £ millions	2025		2024		2023

Total cash inflow for leases as a lessor		21		22		19

The following table sets out the maturity analysis of lease payments receivable for subleases classified as operating leases, showing the undiscounted lease payments to be received after the reporting date, and subleases classified as finance leases showing the undiscounted lease payments to be received after the reporting date and the net investment in the finance lease receivable. During the year, the investment in finance lease receivable decreased by £

m (2024: decreased £17m), primarily due to payments received.


All figures in £ millions	Operating leases		Finance leases			2025 Total		2024 Total		2023 Total

Less than one year		12		23			35		31		31

One to two years		12		23			35		33		33

Two to three years		12		17			29		33		34

Three to four years		12		6			18		26		34

Four to five years		12		2			14		14		27

More than five years		28		–			28		36		54

Total undiscounted lease payments receivable		88		71			159		173		213

Unearned finance income				(5	)

Net investment in finance lease receivable				66