Income Tax Act 2007 section 614AB

Accountancy rental earnings

Section 614AB defines "accountancy rental earnings" for a lease by selecting the highest of three possible rental earnings figures for a lessor's period of account, ensuring the amount that best reflects the true economic substance of the leasing arrangement is used for income tax purposes.

• Accountancy rental earnings are the greatest of three amounts: the lessor's own rental earnings, those of a connected person, or those shown in consolidated group accounts.
• Taking the highest figure prevents avoidance where a capital sum forming part of the leasing arrangement is received by a related party rather than the lessor itself.
• These rules apply to lessors within the charge to income tax, including non-UK resident companies that lease land and buildings.
• The definition of "rental earnings" used in this calculation is set out separately in section 614AC.