Corporation Tax Act 2009 section 234

Restrictions on section 232 expenses: lease of part of premises

Section 234 deals with how the tenant's deemed expense deduction under section 232 is adjusted when a sublease is granted over only part of the premises covered by the original taxed lease.

• Where a sublease covers only part of the premises subject to the taxed lease, and a lease premium receipt arises on that sublease that has been reduced by reference to the taxed receipt, the expense calculations under sections 232 and 233 must be applied separately to each part of the premises
• For the part of the premises covered by the sublease, the amount used in the expense formula (known as "A") is adjusted by multiplying the unreduced taxed receipt by the fraction of the total premises that the subleased part represents
• If more than one sublease has been granted over different parts of the premises, the calculations are applied separately to each subleased part and to whatever remainder is left
• The fraction used to apportion the taxed receipt between parts of the premises must be determined on a just and reasonable basis