Income Tax (Trading and Other Income) Act 2005 section 311

Reverse premiums

Section 311, read with Schedule 2 paragraph 72, deals with the transitional rules that exempt certain reverse premiums from being taxed as property business receipts, based on whether they were received or became due before a specific date.

• A reverse premium is an inducement payment made by a landlord (or other party) to a tenant to enter into a property transaction such as a lease
• Section 311 normally requires reverse premiums received in connection with a property business to be treated as taxable receipts of that business
• However, reverse premiums that were either received before 9 March 1999, or to which the recipient was already entitled immediately before that date, are exempt from the Section 311 charge
• Any arrangements made on or after 9 March 1999 must be disregarded when determining whether the recipient had an entitlement to the reverse premium before that date