Corporation Tax Act 2010 section 845

Commercial rent: comparison with payments other than rent

Section 845 defines how "commercial rent" is determined when the sale and leaseback rules apply to payments other than rent, such as rentcharges or other obligations connected with transferred land.

• Commercial rent is the open market rent that would be expected under a hypothetical lease of the land at the time the rentcharge or other transaction was entered into.
• The hypothetical lease must be a tenant's repairing lease, meaning the tenant is obliged to maintain and repair all or substantially all of the premises.
• The duration of the hypothetical lease must match the period over which the non-rent payments are due, subject to a maximum of 200 years.
• If the payment obligation is perpetual or runs for 200 years or more, the appropriate lease duration is deemed to be 200 years; if shorter, it matches the actual payment period.