Income Tax (Trading and Other Income) Act 2005 section 67

Lease premiums: pre-commencement receipts treated as taxed receipts

Section 67 explains how lease premium receipts that arose before 6 April 2005 under the old tax rules are brought into the current framework and treated as taxed receipts for the purposes of the lease premium provisions in Chapter 4 of Part 3.

• Lease premium receipts arising before 6 April 2005 under the old ICTA rules (or which would have arisen but for certain reductions) are classified as "pre-commencement receipts" and treated as taxed receipts under a taxed lease
• The "receipt period" for such a pre-commencement receipt is the period used in calculating the original receipt, being either the full duration of the lease or the remaining duration at the date of assignment, depending on which old ICTA provision generated the receipt
• The "unreduced amount" is the amount of the pre-commencement receipt as originally calculated, before any reductions that may have applied under the old rules
• Where the original receipt arose because the tenant was obliged to carry out work under the lease, and that work qualified for capital allowances, the unreduced amount is calculated as though the obligation had not included that capital-allowance-qualifying work