Corporation Tax Act 2010 section 855

Position where rent reduces

Section 855 deals with the tax consequences when the rent payable under a new lease decreases from one rental period to the next, within the first fifteen years of the lease.

• If the rent for any rental period in the first fifteen years of a new lease exceeds the rent for the immediately following period of the same length, the new lease is treated as ending at the close of that higher-rent period.
• A "relevant period" is any rental period of the new lease that ends before the fifteenth anniversary of the date the lease term begins.
• The "following comparable period" is the rental period of the same duration that starts the day after the relevant period ends, and "rent for a period" means the total rent payable under the new lease for that period.
• All quarterly rental periods are treated as being the same length, and all monthly rental periods are likewise treated as being the same length, removing any distortion from calendar variations.