Income Tax (Trading and Other Income) Act 2005 section 295

Limit on reductions and deductions

Section 295 caps the total relief that can be claimed by reference to a taxed lease premium receipt, ensuring that the combined reductions and deductions do not exceed the amount of the original receipt still available after other claims have been taken into account.

• The total of reductions under the additional calculation rule and property business expense deductions for a tenant under a taxed lease must not exceed a specified cap
• The cap is the original unreduced taxed receipt less any relief already claimed against it under the equivalent corporation tax provisions
• Relief already claimed includes corporation tax reductions under the additional calculation rule, property business expense deductions, and trading expense deductions all calculated by reference to the same taxed receipt
• The rule prevents double or excessive relief being given across both income tax and corporation tax regimes in respect of the same lease premium