Corporation Tax Act 2010 section 928

Current lessor taxed by reference to accountancy rental earnings

Section 928 requires a lessor to be taxed on the higher of the accountancy rental earnings or the normal rent from a lease, ensuring that the tax charge reflects the economic substance of the rental income.

• Where accountancy rental earnings for a period exceed the normal rent, the lessor is taxed on the higher accountancy figure instead of the actual rent received.
• This applies only where the long funding lease rules in this chapter are in force for the lease in question.
• The deemed rent is treated as accruing evenly over the portion of the accounting period during which the asset is leased.
• The lessor is treated as becoming entitled to the deemed rent as it accrues, ensuring a consistent and even recognition of income for corporation tax purposes.