Income Tax (Trading and Other Income) Act 2005 section 293

Restrictions on section 292 expenses: the additional calculation rule

Section 293 restricts the deemed expense relief available to a tenant under a taxed lease where the additional calculation rule has already reduced a lease premium receipt by reference to the same taxed receipt.

• Where a lease premium receipt has already been reduced under the additional calculation rule by reference to a taxed receipt, the tenant's deemed expense for any qualifying day falling within the receipt period of that lease premium receipt is restricted
• The tenant only receives a deemed expense for a qualifying day if the daily amount of the taxed receipt exceeds the daily reduction of the lease premium receipt, and the expense is limited to that excess
• If a qualifying day falls within the receipt periods of more than one lease premium receipt, the daily reductions of all relevant lease premium receipts are totalled before comparing with the daily amount of the taxed receipt
• Where the lease premium receipt relates to a sub-lease granted out of the taxed lease that covers only part of the premises, section 294 provides further rules on how this restriction operates