Income Tax Act 2007 section 614CC

Current lessor taxed by reference to accountancy rental earnings

Section 614CC requires the current lessor to be taxed on the higher of the accountancy rental earnings or the normal rent from a lease, ensuring that income tax is charged on the accountancy rental earnings where these exceed the normal rent for a period of account.

• Where accountancy rental earnings from a lease exceed the normal rent for a period of account, the lessor is taxed on the higher accountancy rental earnings figure instead of the normal rent
• The lessor is treated for income tax purposes as having been entitled to rental income equal to the accountancy rental earnings for that period
• The deemed rental income is treated as accruing evenly over the portion of the period of account that falls within the lease term
• The lessor is regarded as having become entitled to the income as it accrued on that even basis