Income Tax (Trading and Other Income) Act 2005 section 292

Tenants under taxed leases treated as incurring expenses

Section 292 explains how a tenant under a taxed lease is treated as incurring a daily revenue expense, and how that daily expense amount is calculated by spreading the taxed receipt evenly over the receipt period.

• A tenant under a taxed lease is treated as incurring a revenue expense for each qualifying day — that is, each day falling within the receipt period of a taxed receipt — with a separate calculation for each taxed receipt if there is more than one.
• The daily expense is calculated using the formula A ÷ TRP, where A is the unreduced (i.e. gross, before any deductions) amount of the taxed receipt and TRP is the total number of days in the receipt period.
• No expense arises if the taxed receipt only exists because of the special rules for determining the effective duration of a lease (the rules that can deem a lease to be shorter than its stated term).
• The expense calculation is subject to further restrictions where the additional calculation rule applies, and key terms such as "receipt period" and "unreduced amount" are defined elsewhere in the Act.