Corporation Tax Act 2010 section 867

Commercial rent

Section 867 defines "commercial rent" for the purpose of comparing the tax-deductible rent against a benchmark commercial rent when a trading asset is leased back after a sale or similar transaction.

• Commercial rent is the rent that would be expected for leasing the asset over its remaining normal working life, paid at uniform intervals and at a uniform rate
• The rent must give a reasonable return based on the asset's market value at the time the actual lease was created, taking into account the terms and conditions of the actual lease
• An asset's expected normal working life runs from when it is first put into use until it is finally regarded as unfit for further use, assuming normal usage throughout
• Where the asset is used partly for the relevant trade and partly for other purposes, the commercial rent is calculated by reference to what would be paid for that partial use only