Corporation Tax Act 2009 section 218

Amount treated as lease premium where work required

Section 218 deals with situations where a tenant is obliged under the terms of a lease to carry out work on the premises, and treats the value of that obligation as an additional lease premium for tax purposes.

• Where a lease requires the tenant to carry out work on the premises, the landlord is treated as having received an additional premium
• The deemed premium equals the increase in value of the landlord's interest resulting from the tenant's obligation to carry out the work
• Work that would have been a deductible expense for the landlord's property business (if the landlord had done it) is excluded from this treatment
• This deemed premium is added to any actual premium paid and may create or increase a taxable property business receipt for the landlord under the lease premium rules