Part 3Property income
Chapter 4Profits of property businesses: lease premiums etc.
Amounts treated as receipts: leases
279Sums payable instead of rent
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 or of includes that transaction for the tax year in which the sum becomes payable.
4
The amount of the receipt is given by the formula—
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.