Income Tax (Trading and Other Income) Act 2005 section 288

The additional calculation rule

Section 288 sets out how to reduce a lease premium receipt (or similar property income receipt) when there is an earlier taxed receipt relating to the same property, so that the same economic value is not taxed twice.

• Where conditions in section 287 are met, the amount of a new lease premium receipt must be reduced by a "basic relieving amount" calculated by reference to any earlier taxed receipt that has an unused amount
• The basic relieving amount is calculated using the formula: A × LRP ÷ TRP, where A is the unreduced amount of the earlier taxed receipt, LRP is the receipt period of the new receipt, and TRP is the receipt period of the earlier taxed receipt
• If there is more than one earlier taxed receipt with an unused amount, the total of all the basic relieving amounts is used, but the overall reduction cannot exceed the amount of the new receipt being calculated
• The "receipt period" varies depending on the type of receipt — it may be the effective duration of the lease, the period for which a sum is payable instead of rent, the period a variation or waiver has effect, or the remaining lease duration at the date of assignment