Corporation Tax Act 2009 section 219

Sums payable instead of rent

Section 219 deals with the tax treatment of lump sum payments made by a tenant in place of rent, treating part of such payments as a taxable property business receipt.

• Where a tenant pays a lump sum instead of all or part of the rent for a period of 50 years or less, the recipient company is treated as receiving a taxable property business receipt, regardless of the overall length of the lease itself.
• The taxable amount is calculated using the formula: Sum × (50 − Y) ÷ 50, where Y is the number of complete 12-month periods (excluding the first) in the period covered by the payment.
• The taxable receipt is brought into account in the accounting period in which the sum becomes payable, and may be reduced if the additional calculation rule in section 228 applies.
• When determining the length of the period the payment covers, any time falling after the effective end of the lease is excluded from the calculation.