Corporation Tax Act 2010 section 909

Meaning of "normal rental excess" and "cumulative normal rental excess"

Section 909 defines "normal rental excess" and "cumulative normal rental excess" for leases treated as finance leases or loans under generally accepted accounting practice.

• A normal rental excess arises when the normal rent for a period exceeds the accountancy rental earnings for that period, provided the lease is treated as a finance lease or loan under accounting standards.
• Where taxable rent has already been reduced under section 908 (for cumulative accountancy rental excess), the normal rental excess is recalculated using the reduced normal rent figure rather than the original.
• The cumulative normal rental excess is a running total of all previous normal rental excesses, reduced by amounts already set off against taxable rent under section 910 or written down for bad debt relief under section 913.
• The cumulative normal rental excess may be increased where bad debts previously relieved under section 913 are subsequently recovered, as provided for by section 914.