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In force since 2026-07-15, as the publisher states.
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Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.
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(1) The profits of a property business are calculated in the same way as the profits of a trade. (2) But this is subject to— (a) section 272, which limits the rule in subsection (1) in relation to a property business whose profits are calculated in accordance with GAAP, and (b) section 272ZA, which limits that rule in relation to a property business whose profits are calculated on the cash basis.
Propose a change(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2) In relation to a property business whose profits are calculated in accordance with GAAP, the provisions of Part 2 (trading income) which apply as a result of section 271E(1) are limited to the following— In Chapter 3 (basic rules)— . . . | . . . section 26 | losses calculated on same basis as profits section 27 | receipts and expenses section 28 | items treated under CAA 2001 as receipts and expenses section 28A | money's worth section 29 | interest In Chapter 4 (rules restricting deductions)— section 33 | capital expenditure section 34 | expenses not wholly and exclusively for trade and unconnected losses section 35 | bad and doubtful debts sections 36 and 37 | unpaid remuneration sections 38 to 44 | employee benefit contributions sections 45 to 47 | business entertainment and gifts sections 48 to 50B | car ... hire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . section 52 | exclusion of double relief for interest section 53 | social security contributions section 54 | penalties , interest and VAT surcharges and interest section 55 | crime-related payments section 55A | expenditure on integral features In Chapter 5 (rules allowing deductions)— section 57 | pre-trading expenses sections 58 and 59 | incidental costs of obtaining finance . . . | . . . section 69 | payments for restrictive undertakings sections 70 and 71 | seconded employees section 72 | payroll deduction schemes: contributions to agents' expenses sections 73 to 75 | counselling and retraining expenses sections 76 to 80 | redundancy payments etc. section 81 | personal security expenses sections 82 to 86 | contributions to local enterprise organisations or urban regeneration companies sections 86A and 86B | contributions to flood and coastal erosion risk management projects sections 87 and 88 | scientific research sections 89 and 90 | expenses connected with patents, designs and trade marks section 91 | payments to Export Credits Guarantee Department section 94A | costs of setting up SAYE option scheme or CSOP scheme section 94AA | deductions in relation to salaried members of limited liability partnerships In Chapter 5A (deductions allowable at a fixed rate) section 94C | exclusion of provisions of Chapter 5A for firms with partner who is not an individual sections 94D to 94G | expenditure on vehicles In Chapter 6 (receipts)— section 96 | capital receipts section 97 | debts incurred and later released section 104 | distribution of assets of mutual concerns section 105 | industrial development grants section 106 | sums recovered under insurance policies etc. In Chapter 7 (gifts to charities etc.)— section 109 | receipt by donor or connected person of benefit attributable to certain gifts In Chapter 10A (long funding leases)— Sections 148A to 148J | Leases of plant or machinery: special rules for long funding leases In Chapter 11 (other specific trades)— section 155 | levies and repayments under FISMA 2000 In Chapter 13 (deductions from profits)— sections 188 to 191 | unremittable amounts (3) In those provisions the expression “this Part” is to be read as a reference to those provisions as applied by subsection (2) and to the other provisions of Part 3.
Propose a change(1) In relation to a property business whose profits are calculated on the cash basis, the provisions of Part 2 (trading income) which apply as a result of section 271E(1) are limited to the following— In Chapter 3 (basic rules)— section 26 | losses calculated on same basis as profits section 28A | money's worth section 29 | interest In Chapter 4 (rules restricting deductions)— section 34 | expenses not wholly and exclusively for trade and unconnected losses sections 38 to 42 and 44 | employee benefit contributions sections 45 to 47 | business entertainment and gifts section 52 | exclusion of double relief for interest section 53 | social security contributions section 54 | penalties , interest and VAT surcharges and interest section 55 | crime-related payments section 55A | expenditure on integral features In Chapter 5 (rules allowing deductions)— section 57 | pre-trading expenses sections 58 and 59 | incidental costs of obtaining finance section 69 | payments for restrictive undertakings sections 70 and 71 | seconded employees section 72 | payroll deduction schemes: contributions to agents' expenses sections 73 to 75 | counselling and retraining expenses sections 76 to 80 | redundancy payments etc section 81 | personal security expenses sections 82 to 86 | contributions to local enterprise organisations or urban regeneration companies sections 86A and 86B | contributions to flood and coastal erosion risk management projects sections 87 and 88 | scientific research sections 89 and 90 | expenses connected with patents, designs and trade marks section 91 | payments to Export Credits Guarantee Department In Chapter 5A (deductions allowable at a fixed rate)— section 94C | exclusion of provisions of Chapter 5A for firms with partner who is not an individual sections 94D to 94G | expenditure on vehicles In Chapter 6 (receipts)— section 96 | capital receipts section 97 | debts incurred and later released section 104 | distribution of assets of mutual concerns section 105(1) and (2)(b) and (c) | industrial development grants section 106 | sums recovered under insurance policies etc In Chapter 6A (amounts not reflecting commercial transactions)— section 106C | amounts not reflecting commercial transactions section 106D | capital receipts section 106E | gifts to charities etc In Chapter 7 (gifts to charities etc)— section 109 | receipt by donor or connected person of benefit attributable to certain gifts (2) In those provisions, the expression “this Part” is to be read as a reference to those provisions as applied by subsection (1) and to the other provisions of Part 3. (3) In section 106D, the reference to subsection (4) or (5) of section 96A is to be read as a reference to subsection (2), (3) or (5) of section 307F (deemed capital receipts under, or after leaving, cash basis).
Propose a change(1) Where a deduction is allowed for costs of a dwelling-related loan in calculating the profits of a property business for the tax year 2017-18, the amount allowed to be deducted in respect of those costs in calculating those profits for income tax purposes is 75% of what would be allowed apart from this section. (2) Where a deduction is allowed for costs of a dwelling-related loan in calculating the profits of a property business for the tax year 2018-19, the amount allowed to be deducted in respect of those costs in calculating those profits for income tax purposes is 50% of what would be allowed apart from this section. (3) Where a deduction is allowed for costs of a dwelling-related loan in calculating the profits of a property business for the tax year 2019-20, the amount allowed to be deducted in respect of those costs in calculating those profits for income tax purposes is 25% of what would be allowed apart from this section. (4) In calculating the profits of a property business for income tax purposes for the tax year 2020-21 or any subsequent tax year, no deduction is allowed for costs of a dwelling-related loan. (5) Subsections (1) to (4) do not apply in relation to calculating the profits of a property business for the purposes of charging a company to income tax on so much of those profits as accrue to it otherwise than in a fiduciary or representative capacity. (6) For the meaning of “costs of a dwelling-related loan” see section 272B. (7) See also section 307D (cash basis: modification of deduction for costs of loans).
Propose a change(1) Subsections (2) to (5) apply for the purposes of section 272A. (2) “Dwelling-related loan”, in relation to a property business, means so much of an amount borrowed for purposes of the business as is referable (on a just and reasonable apportionment) to so much of the business as is carried on for the purpose of generating income from— (a) land consisting of a dwelling-house or part of a dwelling-house, or (b) an estate, interest or right in or over land within paragraph (a), but see subsection (3). (3) Anything that in the course of a property business is done for creating (by construction or adaptation) a dwelling-house, or part of a dwelling-house, from which income is to be generated is, for the purposes of subsection (2), to be treated as done for the purpose mentioned in that subsection. (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5) “Costs”, in relation to a dwelling-related loan, means— (a) interest on the loan, (b) an amount in connection with the loan that, for the person receiving or entitled to the amount, is a return in relation to the loan which is economically equivalent to interest, or (c) incidental costs of obtaining finance by means of the loan. (6) Section 58(2) to (4) (meaning of “incidental costs of obtaining finance”) apply for the purposes of subsection (5)(c). (7) A reference in this section to a “dwelling-house” includes any land occupied or enjoyed with it as its garden or grounds.
Propose a change(1) The rules for calculating the profits of a property business need to be read with the following provisions of Part 2 (trading income)— (a) section 19 (tied premises), (b) section 20 (caravan sites where trade carried on), (c) section 21 (surplus business accommodation), and (d) section 22(3) (payments for wayleaves). (2) Those provisions secure that amounts which would otherwise be brought into account in calculating the profits of the business are, or may be, brought into account instead in calculating the profits of a trade.
Propose a change(1) Any relevant permissive rule in this Part— (a) has priority over any relevant prohibitive rule in this Part, but (b) is subject to— (i) section 36 (unpaid remuneration), as applied by section 272, (ii) section 38 (employee benefit contributions), as applied by sections 272 and 272ZA, (iii) section 48 (car hire), as applied by section 272, (iv) section 55 (crime-related payments), as applied by sections 272 and 272ZA, (v) section 272A (finance costs), and (vi) section 307D (cash basis: modification of deduction for costs of loans). (1A) But, if the relevant permissive rule would allow a deduction in calculating the profits of a property business in respect of an amount which arises directly or indirectly in consequence of, or otherwise in connection with, relevant tax avoidance arrangements, that rule— (a) does not have priority under subsection (1)(a), and (b) is subject to any relevant prohibitive rule in this Part (and to the provisions mentioned in subsection (1)(b)). (2) In this section “any relevant permissive rule in this Part” means any provision of this Part (apart from sections 291 to 294) which allows a deduction in calculating the profits of a property business. (3) In this section “any relevant prohibitive rule in this Part”, in relation to any deduction, means any provision of this Part (apart from sections 36, 38, 48 and 55, as applied by section 272 , or sections 38 and 55 as applied by section 272ZA , and apart also from sections 272A and 307D) which might otherwise be read as— (a) prohibiting the deduction, or (b) restricting the amount of the deduction. (3A) In this section “relevant tax avoidance arrangements” means arrangements— (a) to which the person carrying on the property business is a party, and (b) the main purpose, or one of the main purposes, of which is the obtaining of a tax advantage (within the meaning of section 1139 of CTA 2010). “Arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable). (4) In this section any reference to any provision of this Part includes any provision applied by section 272 or 272ZA.
Propose a change(1) If for a tax year an individual has— (a) a relievable amount in respect of a property business, or (b) two or more relievable amounts each in respect of a different property business, the individual is entitled to relief under this section for that year in respect of that relievable amount or (as the case may be) each of those relievable amounts. (2) An individual has a relievable amount for a tax year in respect of a property business if for that year the individual has any one or more of the following in respect of that business— (a) a current-year amount; (b) a current-year estate amount; (c) a brought-forward amount. (3) An individual's relievable amount for a tax year in respect of a property business is the total of— (a) the individual's current-year amount (if any) for that year in respect of that business, (b) the individual's current-year estate amounts (if any) for that year in respect of that business, and (c) the individual's brought-forward amount (if any) for that year in respect of that business. (4) An individual has a current-year amount for a tax year in respect of a property business if— (a) an amount (“A”) would be deductible in calculating the profits for income tax purposes of that business for that year but for section 272A, (b) the individual is liable for income tax on N% of those profits, where N is a number— (i) greater than 0, and (ii) less than or equal to 100, and (c) that liability is not under Chapter 6 of Part 5 (estate income), in which event the individual's current-year amount for that tax year in respect of that business is equal to N% of A. (5) An individual has a current-year estate amount for a tax year (“the current year”), in respect of a property business and a particular deceased person's estate, if— (a) an amount (“A”) would, but for section 272A, be deductible in calculating the profits for income tax purposes of that business for a particular tax year (“the profits year”), whether that year is the current year or an earlier tax year, (b) the personal representatives of the deceased person are liable for income tax on N% of those profits, where N is a number— (i) greater than 0, and (ii) less than or equal to 100, (c) the individual is liable for income tax on estate income treated under Chapter 6 of Part 5 as arising in the current year from an interest in the estate, and (d) the basic amount of that estate income consists of, or includes, an amount representative of E% of the personal representatives' N% of the profits of the business for the profits year, where E is a number— (i) greater than 0, and (ii) less than or equal to 100, in which event the individual's current-year estate amount for the current tax year, in respect of that business and estate and the profits year, is equal to E% of N% of A. (6) As to whether an individual has a brought-forward amount for a tax year in respect of a property business, see section 274AA(4). (7) In this section and section 274AA— “estate income”, and “basic amount” in relation to any estate income, have the same meaning as in Chapter 6 of Part 5 (see sections 649 and 656(4)).
Propose a change(1) This section applies if for a tax year an individual is entitled to relief under section 274A in respect of a relievable amount or in respect of each of two or more relievable amounts, and in the following subsections of this section “relievable amount” means that relievable amount or (as the case may be) any of those relievable amounts. (2) In respect of a relievable amount, the actual amount on which relief for the year is to be given is (subject to subsection (3)) the amount (“L”) that is the lower of— (a) the relievable amount, and (b) the total of— (i) the profits for income tax purposes of the property business concerned for the year after any deduction under section 118 of ITA 2007 (“the adjusted profits”) or, if less, the share (if any) of the adjusted profits on which the individual is liable to income tax otherwise than under Chapter 6 of Part 5, and (ii) so much (if any) of the relievable amount as consists of current-year estate amounts. (3) If S is greater than the individual's adjusted total income for the year (“ATI”), the actual amount on which relief for the year is to be given in respect of a relievable amount is given by— ATI S × L where— S is the total obtained by identifying the amount that is L for each relievable amount and then finding the total of the amounts identified, and L has the same meaning as in subsection (2). (4) Where— (a) a relievable amount, is greater than— (b) the actual amount on which relief for the year is to be given in respect of the relievable amount, the difference is the individual's brought-forward amount for the following tax year in respect of the property business concerned. (5) The amount of the relief for the year in respect of a relievable amount is given by— AA ×PBR where— AA is the actual amount on which relief for the year is to be given in respect of the relievable amount, and PBR is the property basic rate of income tax for the year, (6) For the purposes of this section, an individual's adjusted total income for a tax year is identified as follows— Step 1 Identify the individual's net income for the year (see Step 2 of the calculation in section 23 of ITA 2007). Step 2 Exclude from that net income— so much of it as is within section 18(3) or (4) of ITA 2007 (income from savings), and so much of it as is dividend income. Step 3 Reduce what is left after Step 2 of this calculation by the amount of any allowances deducted for the year in the individual's case at Step 3 of the calculation in section 23 of ITA 2007. The result is the individual's adjusted total income for the year.
Propose a change(1) If for a tax year the trustees of a settlement have— (a) a relievable amount in respect of a property business, or (b) two or more relievable amounts each in respect of a different property business, the trustees of the settlement are entitled to relief under this section for that year in respect of that relievable amount or (as the case may be) each of those relievable amounts. (2) The trustees of a settlement have a relievable amount for a tax year in respect of a property business if for that year the trustees of the settlement have a current-year amount, or brought-forward amount, in respect of that business (or have both). (3) In the case of trustees of a settlement, their relievable amount for a tax year in respect of a property business is the total of— (a) their current-year amount (if any) for that year in respect of that business, and (b) their brought-forward amount (if any) for that year in respect of that business. (4) The trustees of a settlement have a current-year amount for a tax year in respect of a property business if— (a) an amount (“A”) would be deductible in calculating the profits for income tax purposes of that business for that year but for section 272A, (b) the trustees of the settlement are liable for income tax on N% of those profits, where N is a number— (i) greater than 0, and (ii) less than or equal to 100, and (c) in relation to the trustees of the settlement, that N% of those profits is accumulated or discretionary income, in which event the current-year amount of the trustees of the settlement for that tax year in respect of that business is equal to N% of A. (5) As to whether the trustees of a settlement have a brought-forward amount for a tax year in respect of a property business, see section 274C(3). (6) In this section and section 274C “accumulated or discretionary income” has the meaning given by section 480 of ITA 2007.
Propose a change(1) This section applies if for a tax year the trustees of a settlement are entitled to relief under section 274B in respect of a relievable amount or in respect of each of two or more relievable amounts, and in the following subsections of this section “relievable amount” means that relievable amount or (as the case may be) any of those relievable amounts. (2) The amount of the relief in respect of a relievable amount is given by— L × BR where— PBR is the property basic rate of income tax for the year, and L is the lower of— the relievable amount, and the profits for income tax purposes of the property business concerned for the year after any deduction under section 118 of ITA 2007 (“the adjusted profits”) or, if less, the share of the adjusted profits— on which the trustees of the settlement are liable for income tax, and which, in relation to the trustees of the settlement, is accumulated or discretionary income. (3) Where L in the case of a relievable amount is less than the relievable amount, the difference between them is the brought-forward amount of the trustees of the settlement for the following tax year in respect of the property business concerned.
Propose a change(1) This section and sections 275A to 275C apply if a period of account of a property business does not coincide with a tax year. (2) Any of the following steps may be taken if they are necessary in order to arrive at the profits or losses of the tax year— (a) apportioning the profits or losses of a period of account to the parts of that period falling in different tax years, and (b) adding the profits or losses of a period of account (or part of a period) to profits or losses of other periods of account (or parts). (3) The steps must be taken by reference to the number of days in the periods concerned. (4) But the person carrying on the business may use a different way of measuring the length of the periods concerned if— (a) it is reasonable to do so, and (b) the way of measuring the length of periods is used consistently for the purposes of the business. (5) Sections 275A and 275B contain rules for the purpose of avoiding the need to apportion profits or losses under this section (and section 275C makes provision for the person carrying on the business to elect for those rules not to apply).
Propose a change(1) This section applies if, in a tax year (“the relevant tax year”), the person carrying on the business— (a) starts to carry it on after 31 March, and (b) does not permanently cease to carry it on. (2) For the purposes of this Part— (a) the profits or losses of the business of the relevant tax year are treated as nil, and (b) the actual profits or losses of the business of the relevant tax year are treated as arising in the following tax year.
Propose a change(1) This section applies if, in a tax year (“the relevant tax year”), the person carrying on the business— (a) does not start to carry it on or starts to carry it on before 1 April, (b) does not permanently cease to carry it on, and (c) has an accounting date that is 31 March or 1, 2, 3 or 4 April. (2) For the purposes of this Part— (a) the profits or losses of the business of the period beginning with the day after the accounting date and ending with 5 April in the relevant tax year are treated as nil, and (b) the actual profits or losses of the business of that period are treated as arising in the following tax year. (3) In this section, “accounting date” in relation to a tax year means— (a) the date in the tax year to which accounts are drawn up, or (b) if there are two or more such dates, the latest of them.
Propose a change(1) The person carrying on the business may make an election under this section. (2) If an election under this section has effect for a tax year, neither of sections 275A and 275B apply in relation to the business for that tax year. (3) An election under this section— (a) must be made on or before the first anniversary of the normal self-assessment filing date for the first tax year for which it is to have effect, and (b) has effect for that tax year and the four tax years following that tax year (subject to subsection (4)). (4) If the person permanently ceases to carry on the business before the end of the last of the tax years mentioned in subsection (3)(b), the election has effect for each tax year up to and including the tax year immediately before the tax year in which the person permanently ceases to carry on the business.
Propose a change(1) This Chapter provides for certain amounts (which would otherwise generally be amounts of a capital nature) to be brought into account as receipts in calculating the profits of a property business. (2) The amounts relate to short-term leases in the case of— section 277 (lease premiums), section 278 (amount treated as lease premium where work required), section 280 (sums payable for surrender of lease), and section 282 (assignments for profit of lease granted at undervalue). (3) The amounts relate to any lease in the case of— section 279 (sums payable instead of rent), and section 281 (sums payable for variation or waiver of terms of lease). (4) The amounts relate to the sale of any estate or interest in land in the case of— section 284 (sales with right to reconveyance), and section 285 (sale and leaseback transactions). (5) This Chapter also permits certain deductions in calculating the profits of property businesses carried on by tenants under certain leases (see sections 291 and 292 ; but see also section 276A). (6) In this Chapter “short-term lease” means a lease whose effective duration is 50 years or less.
Propose a changeThe following provisions of this Chapter do not apply in calculating the profits of a property business on the cash basis— (a) sections 291 to 294 (tenants under taxed leases: deductions), and (b) sections 296 and 298 (ICTA modifications).
Propose a change(1) This section applies if a premium is required to be paid— (a) under a short-term lease, or (b) otherwise under the terms subject to which a short-term lease is granted. (2) The person to whom the premium is due is treated as— (a) entering into a transaction mentioned in section 264 (if the land to which the lease relates is in the United Kingdom) or section 265 (if that land is outside the United Kingdom), and (b) receiving the amount calculated under subsections (4) and (5) as a result of that transaction. (3) That amount is brought into account as a receipt in calculating the profits of the property business which consists of or includes that transaction for the tax year in which the lease is granted. (4) The amount of the receipt is given by the formula— P × ( 50 - Y 50 ) where— P is the premium, and Y is the number of complete periods of 12 months (other than the first) comprised in the effective duration of the lease. (5) But, if the rule in section 288 (the additional calculation rule) applies, the amount given by the formula in subsection (4) is reduced by the amount calculated in accordance with section 288.
Propose a change(1) This section applies if the terms subject to which a lease is granted impose on the tenant an obligation to carry out work on the premises. (2) The lease is treated for the purposes of section 277 (lease premiums) as requiring the payment of a premium to the landlord (in addition to any other premium). (3) The amount of the premium is the amount by which the value of the landlord's estate or interest immediately after the commencement of the lease exceeds what its value would have been at that time if the terms of the lease did not impose the obligation on the tenant. (4) An obligation, or part of an obligation, that requires the carrying out of excepted work is ignored for the purposes of this section. (5) Work is “excepted work” if the payment for carrying it out would, if the landlord and not the tenant were obliged to carry it out, be deductible as an expense in calculating the profits of the landlord's property business.
Propose a change(1) This section applies if— (a) under the terms subject to which a lease is granted a sum becomes payable by the tenant instead of the whole or a part of the rent for a period, and (b) the period is 50 years or less. (2) The person to whom the sum is due is treated as— (a) entering into a transaction mentioned in section 264 (if the land to which the lease relates is in the United Kingdom) or section 265 (if that land is outside the United Kingdom), and (b) receiving the amount calculated under subsections (4) and (5) as a result of that transaction. (3) That amount is brought into account as a receipt in calculating the profits of the property business which consists of or includes that transaction for the tax year in which the sum becomes payable. (4) The amount of the receipt is given by the formula— S × ( 50 - Y 50 ) where— S is the sum payable instead of rent, and Y is the number of complete periods of 12 months (other than the first) comprised in the period in relation to which the sum is payable. (5) But, if the rule in section 288 (the additional calculation rule) applies, the amount given by the formula in subsection (4) is reduced by the amount calculated in accordance with section 288. (6) In determining for the purposes of this Chapter the duration of the period in relation to which the sum is payable, any part of the period that falls after the expiry of the effective duration of the lease is excluded.
Propose a change(1) This section applies if, under the terms subject to which a short-term lease is granted, a sum becomes payable by the tenant as consideration for the surrender of the lease. (2) The person to whom the sum is due is treated as— (a) entering into a transaction mentioned in section 264 (if the land to which the lease relates is in the United Kingdom) or section 265 (if that land is outside the United Kingdom), and (b) receiving the amount calculated under subsections (4) and (5) as a result of that transaction. (3) That amount is brought into account as a receipt in calculating the profits of the property business which consists of or includes that transaction for the tax year in which the sum becomes payable. (4) The amount of the receipt is given by the formula— S × ( 50 - Y 50 ) where— S is the sum payable as consideration for the surrender of the lease, and Y is the number of complete periods of 12 months (other than the first) comprised in the effective duration of the lease. (5) But, if the rule in section 288 (the additional calculation rule) applies, the amount given by the formula in subsection (4) is reduced by the amount calculated in accordance with section 288.
Propose a change(1) This section applies if— (a) a sum becomes payable by the tenant (otherwise than by way of rent) as consideration for the variation or waiver of a term of a lease, (b) the sum is due to the landlord or a person who is connected with the landlord, and (c) the period for which the variation or waiver has effect is 50 years or less. (2) The person to whom the sum is due is treated as— (a) entering into a transaction mentioned in section 264 (if the land to which the lease relates is in the United Kingdom) or section 265 (if that land is outside the United Kingdom), and (b) receiving the amount calculated under subsections (4) and (5) as a result of that transaction. (3) That amount is brought into account as a receipt in calculating the profits of the property business which consists of or includes that transaction for the tax year in which the contract providing for the variation or waiver is entered into. (4) The amount of the receipt is given by the formula— S × ( 50 - Y 50 ) where— S is the sum payable as consideration for the variation or waiver, and Y is the number of complete periods of 12 months (other than the first) comprised in the period for which the variation or waiver has effect. (5) But, if the rule in section 288 (the additional calculation rule) applies, the amount given by the formula in subsection (4) is reduced by the amount calculated in accordance with section 288. (6) In determining for the purposes of this Chapter the duration of the period for which the variation or waiver has effect, any part of the period that falls after the expiry of the effective duration of the lease is excluded.
Propose a change(1) This section applies if a grant of a lease constitutes a disposal of an asset for the purposes of section 809BZA(2)(b) or 809BZF(2)(a) of ITA 2007 (disposals under finance arrangements). (2) Sections 277 to 281 do not apply in relation to a premium paid in respect of the grant.
Propose a change(1) This section applies to an assignment of a short-term lease if— (a) the lease was granted at an undervalue, and (b) a profit is made on the assignment. (2) The person who assigns the lease is treated as— (a) entering into a transaction mentioned in section 264 (if the land to which the lease relates is in the United Kingdom) or section 265 (if that land is outside the United Kingdom), and (b) receiving the amount calculated under subsections (4) and (5) as a result of that transaction. (3) That amount is brought into account as a receipt in calculating the profits of the property business which consists of or includes that transaction for the tax year in which the consideration for the assignment becomes payable. (4) The amount of the receipt is given by the formula— P × ( 50 - Y 50 ) where— P is the lesser of— (a) the profit on the assignment, and (b) the amount by which the undervalue exceeds the total of the profits (if any) made on previous assignments of the lease, and Y is the number of complete periods of 12 months (other than the first) comprised in the effective duration of the lease. (5) But, if the rule in section 288 (the additional calculation rule) applies, the amount given by the formula in subsection (4) is reduced by the amount calculated in accordance with section 288. (6) Section 283 explains references in this section to the grant of a lease at an undervalue and the making of a profit on an assignment of a lease.
Propose a change(1) This section operates for the purposes of section 282. (2) A lease is granted at an undervalue if the terms subject to which it was granted are such that the landlord who granted it could have required the payment of an additional sum by way of premium, or additional premium, for its grant. (3) The additional sum is the undervalue. (4) The test in subsection (2) must be applied— (a) having regard to values prevailing at the time the lease was granted, and (b) on the assumption that the negotiations for the lease were at arm's length. (5) A profit is made on an assignment of a lease if the consideration for the assignment exceeds— (a) if the lease has not previously been assigned, any premium for which it was granted, or (b) in any other case, any consideration for which it was last assigned. (6) The amount of the excess is the profit.
Propose a change(1) This section applies if— (a) an estate or interest in land is sold subject to terms which provide that it is to be, or may be required to be, reconveyed on a future date to the seller or a person connected with the seller, (b) the period beginning with the sale and ending with the earliest date on which under the terms of the sale the estate or interest would fall to be reconveyed is 50 years or less, and (c) the price at which the estate or interest is sold exceeds the price at which it is to be reconveyed. (2) The seller is treated as— (a) entering into a transaction mentioned in section 264 (if the land is in the United Kingdom) or section 265 (if the land is outside the United Kingdom), and (b) receiving the amount calculated under subsection (4) as a result of that transaction. (3) That amount is brought into account as a receipt in calculating the profits of the property business which consists of or includes that transaction for the tax year in which the estate or interest is sold. (4) The amount of the receipt is given by the formula— E × ( 50 - Y 50 ) where— E is the amount by which the price at which the estate or interest is sold exceeds the price at which it is to be reconveyed, and Y is the number of complete periods of 12 months (other than the first) comprised in the period beginning with the sale and ending with the earliest date on which under the terms of the sale the estate or interest would fall to be reconveyed. (5) See section 286 for some provisions which are supplementary to this section.
Propose a change(1) This section applies if— (a) an estate or interest in land is sold subject to terms which provide for the grant of a lease directly or indirectly out of the estate or interest to the seller or a person connected with the seller, (b) the period beginning with the sale and ending with the earliest date on which under the terms of the sale the lease would fall to be granted is 50 years or less, and (c) the price at which the estate or interest is sold exceeds the total of— (i) the amount of any premium for the lease, and (ii) the value on the date of the sale of the right to receive a conveyance of the reversion immediately after the lease begins to run. (2) This section does not apply if the lease is granted and begins to run within one month after the sale. (3) The seller is treated as— (a) entering into a transaction mentioned in section 264 (if the land is in the United Kingdom) or section 265 (if the land is outside the United Kingdom), and (b) receiving the amount calculated under subsection (5) as a result of that transaction. (4) That amount is brought into account as a receipt in calculating the profits of the property business which consists of or includes that transaction for the tax year in which the estate or interest is sold. (5) The amount of the receipt is given by the formula— E × ( 50 - Y 50 ) where— E is the amount by which the price at which the estate or interest is sold exceeds the total of— (a) the amount of any premium for the lease, and (b) the value on the date of the sale of the right to receive a conveyance of the reversion immediately after the lease begins to run, and Y is the number of complete periods of 12 months (other than the first) comprised in the period beginning with the sale and ending with the earliest date on which under the terms of the sale the lease would fall to be granted. (6) See section 286 for some provisions which are supplementary to this section.
Propose a change(1) This section operates for the purposes of sections 284 (sales with right to reconveyance) and 285 (sale and leaseback transactions). (2) Subsection (3) explains how to determine for the purposes of section 284 the price at which an estate or interest is to be reconveyed when— (a) the date on which the estate or interest would fall to be reconveyed is not fixed under the terms of the sale, and (b) the price at which it is to be reconveyed varies with the date. (3) The price is taken to be the lowest possible under the terms of the sale. (4) Subsection (5) explains how to determine for the purposes of section 285 the total of— (a) the amount of any premium for the lease, and (b) the value on the date of the sale of the right to receive a conveyance of the reversion immediately after the lease begins to run, when the date for the grant of the lease is not fixed under the terms of the sale and the total varies with the date. (5) The total is taken to be the lowest possible under the terms of the sale. (6) For the purposes of sections 284(3) and 285(4) (receipts of property business for tax year in which estate or interest sold) an estate or interest in land is sold when any of the following occurs— (a) an unconditional contract for its sale is entered into, (b) a conditional contract for its sale becomes unconditional, or (c) an option or right of pre-emption is exercised requiring the seller to enter into an unconditional contract for its sale.
Propose a change(1) The rule in section 288 (the additional calculation rule) applies in relation to the calculation of receipts under— section 277 (lease premiums), section 279 (sums payable instead of rent), section 280 (sums payable for surrender of lease), section 281 (sums payable for variation or waiver of terms of lease), or section 282 (assignments for profit of lease granted at undervalue). (2) It applies if conditions A and B are met. (3) Condition A is that— (a) in the case of a receipt under section 277, 279 or 280, the lease is granted out of a taxed lease, (b) in the case of a receipt under section 281, the lease was granted out of a taxed lease, and (c) in the case of a receipt under section 282, the assignment is of a taxed lease. (4) A lease is a “taxed lease” for the purposes of this Chapter if— (a) there is a receipt under any of sections 277 to 282 in respect of the lease, ... (b) there would be such a receipt, but for the operation of the rule in section 288 (the additional calculation rule) in the calculation of its amount. (c) there is a receipt under any of sections 217 to 222 of CTA 2009 (receipts in respect of lease premiums, sums payable instead of rent, for surrender of lease and for variation or waiver of terms of lease and assignments) in respect of the lease, or (d) there would be such a receipt, but for the operation of the rule in section 228 of that Act (the additional calculation rule) in the calculation of its amount. In this Chapter a receipt falling within paragraph (a), (b), (c) or (d) is referred to as a “taxed receipt”. (5) Condition B is that the taxed receipt, or if there is more than one, at least one of them, has an unused amount. (6) See section 290 for an explanation of when a taxed receipt has an “unused amount”.
Propose a change(1) The rule in this section applies if the conditions mentioned in section 287 are met. (2) The additional calculation rule is that the amount given by the formula in section 277, 279, 280, 281 or 282 must be reduced by the amount calculated in accordance with this section in order to give the amount of the receipt under calculation. (3) The amount of the reduction is— (a) if there is one taxed receipt which has an unused amount, the basic relieving amount by reference to that receipt, and (b) if there is more than one taxed receipt which has an unused amount, the total of the basic relieving amounts by reference to each receipt, adjusted, if necessary, in the light of section 289(5) (reduction not to exceed amount being reduced). (4) The basic relieving amount by reference to a taxed receipt is given by the formula— A × LRP TRP where— A is the unreduced amount of the taxed receipt (which is, generally, the amount given by the formula in section 277, 279, 280, 281 or 282 above, or in section 217, 219, 220, 221 or 222 of CTA 2009, but see section 290(2) to (4) above), LRP is the receipt period of the receipt under calculation, and TRP is the receipt period of the taxed receipt. (5) But the basic relieving amount is different if section 289(2) or (4) applies (certain special cases). (6) For the purposes of this Chapter, the “receipt period” of a receipt is— (a) in the case of a receipt under section 277 or 280, the effective duration of the lease, (b) in the case of a receipt under section 279, the period in relation to which the sum payable instead of rent is payable, (c) in the case of a receipt under section 281, the period for which the variation or waiver has effect, ... (d) in the case of a receipt under section 282, the effective duration of the lease remaining at the date of the assignment, and (e) in the case of a receipt under Chapter 4 of Part 4 of CTA 2009 (profits of property businesses: lease premiums etc), its receipt period within the meaning of that Chapter (see section 228(6) of that Act).
Propose a change(1) This section explains how section 288 operates in some special cases. (2) If— (a) the receipt under calculation is under any of sections 277 to 281, and (b) the lease does not extend to the whole of the premises subject to the taxed lease, the basic relieving amount by reference to a taxed receipt is calculated by multiplying the amount given by the formula in subsection (4) of section 288 by the fraction of those premises which is subject to the lease. (3) This fraction is calculated on a just and reasonable basis. (4) If the basic relieving amount given by section 288(4) or subsection (2) above by reference to a taxed receipt would otherwise exceed the unused amount of the taxed receipt, the basic relieving amount is the unused amount. (5) If the amount of the reduction under section 288 would otherwise exceed the amount given, in respect of the receipt under calculation, by the formula in section 277, 279, 280, 281 or 282, the amount of the reduction is equal to the amount given by the formula.
Propose a change(1) For the purposes of this Chapter, a taxed receipt has an “unused amount” if the unreduced amount exceeds the total of the reductions and deductions referred to in subsection (5). (2) In this Chapter the “unreduced amount” of a taxed receipt is the amount given, in respect of the taxed receipt, by the formula in— (a) section 277, 279, 280, 281 or 282 above, or (b) section 217, 219, 220, 221 or 222 of CTA 2009 (corporation tax provisions corresponding to those listed in paragraph (a)). (3) Subsection (4) applies— (a) to a taxed receipt under section 277 (lease premiums) as a result of section 278 (amount treated as lease premium where work required), and (b) to a taxed receipt under section 217 of CTA 2009 (lease premiums) as a result of section 218 of that Act (amount treated as lease premium where work required). (4) If the obligation to carry out work included the carrying out of work which gives, or will give, rise to qualifying expenditure under CAA 2001, the unreduced amount of the taxed receipt is calculated as if the obligation had not included the carrying out of that work. (5) The reductions and deductions mentioned in subsection (1) are— (a) the reductions under section 288 above or section 228 of CTA 2009 (the additional calculation rule) by reference to the taxed receipt, (b) the deductions allowed in calculating the profits of a trade, profession or vocation for expenses under section 61 above or section 63 of CTA 2009 (tenant under taxed lease who uses land in connection with trade treated as incurring expenses) by reference to the taxed receipt, and (c) the deductions allowed in calculating the profits of a property business for expenses under section 292 below or section 232 of CTA 2009 (tenant under taxed lease who uses premises for purposes of property business treated as incurring expenses) by reference to the taxed receipt. (6) For the purposes of this Chapter references to a reduction under section 288 above or section 228 of CTA 2009 by reference to a taxed receipt are to a reduction under the section concerned so far as attributable to the taxed receipt.
Propose a change(1) Section 292 (tenants under taxed leases treated as incurring expenses) applies in calculating the profits of a property business carried on by the tenant under a taxed lease for the purpose of making deductions for the expenses of the property business. (2) A deduction is allowed for an expense under section 292 for a qualifying day on which the whole or part of the premises subject to the taxed lease is— (a) occupied by the tenant for the purpose of carrying on the property business, or (b) sublet. (3) But any deduction for an expense under section 292 is subject to the application of any provision of Chapter 4 of Part 2 (as applied to property businesses by section 272). (4) The amount of the deduction for an expense under section 292 for a qualifying day by reference to a taxed receipt may be reduced in order to comply with section 295 (limit on reductions and deductions). (5) For the meaning of expressions used in this section, see in particular— section 287(4) (“taxed lease”), and section 287(4) (“taxed receipt”).
Propose a change(1) The tenant under a taxed lease is treated as incurring an expense of a revenue nature in respect of the premises subject to the taxed lease for each qualifying day. (2) If there is more than one taxed receipt, this section applies separately in relation to each of them. (3) A day is a “qualifying day”, in relation to a taxed receipt, if it falls within the receipt period of the taxed receipt. (4) The amount of the expense for the qualifying day by reference to the taxed receipt is given by the formula— A TRP where— A is the unreduced amount of the taxed receipt, and TRP is the number of days in the receipt period of the taxed receipt. (4A) No expense is to be determined under this section by reference to the taxed receipt if subsection (4B) or (4C) applies. (4B) This subsection applies if there would have been no taxed receipt but for the application of Rule 1 in section 303 in determining the effective duration of the lease. (4C) This subsection applies if there would have been no taxed receipt but for the application of Rule 1 in section 243 of CTA 2009 in determining the effective duration of the lease for the purposes of Chapter 4 of Part 4 of that Act. (5) This section is subject to sections 293 and 294 (restrictions on expenses where the additional calculation rule is relevant). (6) For the meaning of expressions used in this section, see in particular— section 288(6) (“receipt period”), and section 290(2) to (4) (“unreduced amount”).
Propose a change(1) This section applies if— (a) in calculating the amount of a receipt under this Chapter there is a reduction under section 288 (the additional calculation rule) by reference to a taxed receipt, or (b) in calculating the amount of a receipt under Chapter 4 of Part 4 of CTA 2009 (profits of a property business: lease premiums etc) there is a reduction under section 228 of that Act (the additional calculation rule) by reference to a taxed receipt. The receipt that is so reduced is referred to in this section as the “lease premium receipt”. (2) Subsections (3) to (5) provide for the application of section 292 for a qualifying day that falls within the receipt period of the lease premium receipt. (3) The tenant under the taxed lease is treated as incurring an expense under section 292 for the qualifying day by reference to the taxed receipt only if the daily amount of the taxed receipt exceeds the daily reduction of the lease premium receipt. (4) If the condition in subsection (3) is met, the amount of the expense under section 292 for the qualifying day by reference to the taxed receipt is equal to that excess. (5) If the qualifying day falls within the receipt periods of more than one lease premium receipt, the reference in subsection (3) to the daily reduction of the lease premium receipt is to be read as a reference to the total of the daily reductions of each of the lease premium receipts whose receipt period includes the qualifying day. (6) In this section— the “daily amount” of the taxed receipt is given by the formula— A TRP where— A is the unreduced amount of the taxed receipt (see section 290(2) to (4)), and TRP is the number of days in the receipt period of the taxed receipt, and the “daily reduction” of a lease premium receipt is given by the formula— AR RRP where— AR is the reduction under section 288 above or section 228 of CTA 2009 by reference to the taxed receipt (see section 290(6)), and RRP is the number of days in the receipt period of the lease premium receipt. (7) Section 294 explains how this section operates if the lease premium receipt is in respect of a lease that has been granted out of the taxed lease and does not extend to the whole of the premises subject to the taxed lease.
Propose a change(1) This section applies if— (a) a lease has been granted out of the taxed lease, (b) the lease does not extend to the whole of the premises subject to the taxed lease, and (c) the condition in subsection (1A) is met. (1A) The condition is that— (a) in calculating the amount of a receipt under any of sections 277 to 281 (receipts in respect of lease premiums or sums payable instead of rent, for surrender of lease or for variation or waiver of terms of lease) in respect of the lease, there is a reduction under section 288 by reference to a taxed receipt, or (b) in calculating the amount of a receipt under any of sections 217 to 221 of CTA 2009 (receipts in respect of lease premiums or sums payable instead of rent, for surrender of lease or for variation or waiver of terms of lease) in respect of the lease, there is a reduction under section 228 of that Act (the additional calculation rule) by reference to a taxed receipt. The receipt that is so reduced is referred to in this section as the “lease premium receipt”. (2) Subsections (3) to (5) apply for a qualifying day that falls within the receipt period of the lease premium receipt. (3) Sections 292 and 293 apply separately in relation to the part of the premises subject to the lease and to the remainder of the premises. (4) If— (a) more than one lease that does not extend to the whole of the premises subject to the taxed lease has been granted out of the taxed lease, and (b) the qualifying day falls within the receipt period of two or more lease premium receipts that relate to different leases, sections 292 and 293 apply separately in relation to each part of the premises subject to a lease to which such a receipt relates and to the remainder of the premises. (5) Where sections 292 and 293 apply in relation to a part of the premises, A becomes the amount calculated by multiplying the unreduced amount of the taxed receipt by the fraction of the premises constituted by the part. (6) This fraction is calculated on a just and reasonable basis.
Propose a change(1) The total of— (a) the reductions under section 288 by reference to a taxed receipt, and (b) the deductions allowed in calculating the profits of a property business for expenses under section 292 (tenant under taxed lease who uses premises for purposes of property business treated as incurring expenses) by reference to the taxed receipt, must not exceed the amount referred to in subsection (2). (2) The amount mentioned in subsection (1) is the difference between— (a) the unreduced amount of the taxed receipt, and (b) the total of the amounts mentioned in subsection (3). (3) Those amounts are— (a) the reductions under section 228 of CTA 2009 (the additional calculation rule) by reference to the taxed receipt, (b) the deductions allowed in calculating the profits of a property business for expenses under section 232 of CTA 2009 (tenant under taxed lease which uses premises for purposes of property business treated as incurring expenses) by reference to the taxed receipt, and (c) the deductions allowed in calculating the profits of a trade, profession or vocation for expenses under section 61 above or section 63 of CTA 2009 (tenant under taxed lease who uses land in connection with trade treated as incurring expenses) by reference to the taxed receipt.
Propose a change(1) This section applies if in respect of a lease— (a) there is a receipt of a Schedule A business or an overseas property business (within the meaning of section 70A(4) of ICTA) as a result of section 34 or 35 of ICTA (treatment of premiums etc. as rent and assignments for profit of lease granted at an undervalue) for an accounting period ending after 5th April 2005 but before 1st April 2009, or (b) there would be such a receipt, but for the operation of section 37(2) or (3) of ICTA (reductions in certain receipts under section 34 or 35 of ICTA). In this Chapter such a receipt is referred to as a “corporation tax receipt”. (2) For the purposes of this Chapter— (a) the lease is treated as a taxed lease, and (b) the corporation tax receipt is treated as a taxed receipt. (3) For the purposes of this Chapter, the “receipt period” of a taxed receipt which is a corporation tax receipt is— (a) in the case of a corporation tax receipt as a result of section 34 of ICTA, the period treated in calculating the amount of the receipt as being the duration of the lease, and (b) in the case of a corporation tax receipt as a result of section 35 of ICTA, the period treated in calculating the amount of the receipt as being the duration of the lease remaining at the date of the assignment. (4) For the purposes of this Chapter the “unreduced amount” of a taxed receipt which is a corporation tax receipt is the amount of the corporation tax receipt as a result of section 34 or 35 of ICTA, before the operation of section 37(2) or (3) of ICTA. (5) Subsection (6) applies to a taxed receipt which is a corporation tax receipt arising as a result of section 34(2) of ICTA (obligation on tenant to carry out work under lease). (6) If the obligation to carry out work includes the carrying out of work which gives, or will give, rise to qualifying expenditure under CAA 2001, the unreduced amount of the taxed receipt is calculated as if the obligation had not included the carrying out of that work.
Propose a change(1) This section applies if— (a) in calculating the amount of a corporation tax receipt, there is a reduction under section 37(2) or (3) of ICTA by reference to the amount chargeable on the superior interest for the purposes of that section, and (b) the amount chargeable on the superior interest is the taxed receipt for the purposes of this Chapter. (2) For the purposes of this Chapter references to a reduction under section 37(2) or (3) of ICTA in a corporation tax receipt by reference to the amount chargeable on the superior interest are to the difference between— (a) the amount of the corporation tax receipt before the operation of section 37(2) or (3) of ICTA, and (b) the amount of the receipt after the operation of that subsection, so far as attributable to the amount chargeable on the superior interest for the purposes of section 37 of ICTA. (3) In sections 290(5)(a) (meaning of “unused amount”) and 295(1)(a) (limit on reductions and deductions) references to reductions under section 288 by reference to the taxed receipt include references to reductions under section 37(2) or (3) of ICTA in corporation tax receipts by reference to the amount chargeable on the superior interest. (4) Sections 292 to 294 apply as follows— (a) the corporation tax receipt is treated as if it were a lease premium receipt for the purposes of sections 293 and 294, (b) references in those sections to the reduction under section 288 by reference to the taxed receipt are, in relation to the corporation tax receipt, to the reduction under section 37(2) or (3) of ICTA by reference to the amount chargeable on the superior interest, and (c) for the purposes of those sections the receipt period of the corporation tax receipt is— (i) in the case of a corporation tax receipt as a result of section 34 of ICTA, the period treated in calculating the amount of the receipt as being the duration of the lease, and (ii) in the case of a corporation tax receipt as a result of section 35 of ICTA, the period treated in calculating the amount of the receipt as being the duration of the lease remaining at the date of the assignment.
Propose a change(1) Subsection (2) applies if— (a) in calculating the profits of a trade, profession or vocation for an accounting period ending after 5th April 2005 but before 1st April 2009, a company is treated as paying rent under section 87(2) of ICTA by reference to the amount chargeable for the purposes of that section, and (b) the amount chargeable is the taxed receipt for the purposes of this Chapter. (2) References in sections 290(5)(b) and 295(3)(c) to the deductions allowed for expenses under section 61 by reference to the taxed receipt include references to the deductions allowed in calculating the profits of the trade, profession or vocation for the rent that the company is treated as paying under section 87(2) of ICTA by reference to the amount chargeable. (3) Subsection (4) applies if— (a) in calculating the profits of a Schedule A business or an overseas property business (within the meaning of section 70A(4) of ICTA) for an accounting period ending after 5th April 2005 but before 1st April 2009, a company is treated as paying rent as a result of section 37(4) of ICTA by reference to the amount chargeable on the superior interest for the purposes of that section, and (b) the amount chargeable on the superior interest is the taxed receipt for the purposes of this Chapter. (4) References in sections 290(5)(c) and 295(1)(b) to the deductions allowed for expenses under section 292 by reference to the taxed receipt include references to the deductions allowed in calculating the profits of the Schedule A business or overseas property business (within the meaning of section 70A(4) of ICTA) for the rent that the company is treated as paying as a result of section 37(4) of ICTA by reference to the amount chargeable on the superior interest.
Propose a change