Corporation Tax Act 2009 Schedule 2 paragraphs 18–20

Tenants under taxed leases

Schedule 2 paragraphs 18 to 20 provide transitional rules ensuring that lease premium receipts taxed under the old ICTA 1988 rules (before 1 April 2009 for corporation tax, or before 2005-06 for income tax) continue to be recognised under the CTA 2009 tenant deduction provisions in sections 62 to 67.

• Lease premiums taxed under the old ICTA rules (sections 34 or 35) before the relevant commencement dates are treated as "taxed receipts" under CTA 2009, and the related leases are treated as "taxed leases", so that tenants can still claim the spreading deduction for those premiums.
• The receipt period over which the tenant spreads the deduction is the deemed duration of the lease used when calculating the original ICTA receipt — or, where the receipt arose on assignment, the remaining lease term at the date of assignment.
• The unreduced amount of the taxed receipt is the figure before any reduction under ICTA section 37(2) or (3), and where the tenant was obliged to carry out work qualifying for capital allowances, the unreduced amount is calculated as though that obligation did not exist.
• Where a sub-lease is granted out of a taxed lease and there was a reduction in the sub-lease premium under ICTA section 37 by reference to the superior interest, the old ICTA receipt on the sub-lease is treated as a lease premium receipt for the purposes of the CTA 2009 restrictions in sections 66 and 67, preserving the interaction between superior and inferior lease premiums.