Income Tax (Trading and Other Income) Act 2005 section 290

Meaning of "unused amount" and "unreduced amount"

Section 290 defines two key terms — "unused amount" and "unreduced amount" — used when calculating the tax relief available to tenants who have paid a lease premium or similar sum that has already been taxed on the landlord.

• The "unreduced amount" of a taxed receipt is the amount originally calculated as taxable on the landlord under the lease premium rules (covering premiums, sums instead of rent, sums for surrender, variation or waiver of lease terms, and assignments at undervalue).
• Where a lease premium included an obligation to carry out work that qualifies for capital allowances, the unreduced amount is recalculated as if that work had not been part of the obligation.
• The "unused amount" exists whenever the unreduced amount exceeds the total of all reductions and deductions already claimed — including the additional calculation rule reductions, trade expense deductions for tenants using the land in a trade, and property business expense deductions for tenants using the premises in a property business.
• References to a reduction under the additional calculation rule are limited to the portion of the reduction that is directly attributable to the particular taxed receipt in question.