Part 2

Trading income
Chapter 5

Trade profits: rules allowing deductions

Tenants under taxed leases

Restrictions on section 61 expenses: lease premium receipts
64
1
This section applies if a lease has been granted out of the taxed lease and—
a
in calculating the amount of a receipt of a property business under Chapter 4 of Part 3 (profits of property businesses: lease premiums
etc
) in respect of the lease, there is a reduction under section 288 (the additional calculation rule) by reference to the taxed receipt, or
b
in calculating the amount of a receipt of a property business under Chapter 4 of Part 4 of CTA 2009 (profits of a property business: lease premiums
etc
) in respect of the lease, there is a reduction under section 228 of that Act (the additional calculation rule) by reference to the taxed receipt.
In this section and sections 65 and 67 the receipt that is so reduced is referred to as a “
lease premium receipt
”.
2
Subsections (3) to (5) provide for the application of section 61 as a result of section 63 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 61 as a result of section 63 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 that expense for the qualifying day by reference to the taxed receipt is equal to that excess.
5
If the qualifying day falls within the receipt period 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, 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 below or section 228 of CTA 2009 by reference to the taxed receipt, and
RRP is the number of days in the receipt period of the lease premium receipt.
7
Section 65 explains how this section operates if the lease does not extend to the whole of the premises subject to the taxed lease.
S. 64(1) substituted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 592(2) (with Sch. 2 Pts. 1, 2)
Words in s. 64(6) inserted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 592(3) (with Sch. 2 Pts. 1, 2)