Income Tax (Trading and Other Income) Act 2005 section 158

Lease premiums etc: reduction of receipts

Section 158 prevents double taxation on lease premiums and certain other lease-related receipts where a person carries on a trade of dealing in land, by reducing the trading receipt to the extent it is already taxed as a property business receipt.

• Where a receipt from a land dealing trade also falls within the property business lease premium rules (covering premiums, sums in lieu of rent, surrender payments, lease variation payments, undervalue lease assignments, and sale-and-leaseback or reconveyance transactions), the trading receipt is reduced by the amount already taxed as a property business receipt
• The reduction — known as the "relevant amount" — equals the amount treated as a property business receipt under the lease premium provisions
• If the trader later claims and receives a tax repayment in respect of a reconveyance or sale-and-leaseback transaction, the relevant amount is adjusted to reflect only the amount that was actually brought into account as a property business receipt for the purpose of calculating that repayment
• Where such a repayment-related adjustment applies, any resulting change to tax liability may be made by assessment or otherwise, and within the time limits that would apply if the adjustment related solely to the tax year in which the repayment claim was made