Income Tax (Trading and Other Income) Act 2005 section 296

Corporation tax receipts treated as taxed receipts

Section 296 ensures that tenants can claim tax relief where their landlord has been charged corporation tax (rather than income tax) on a premium or similar amount arising from a lease, by treating the relevant corporation tax receipt as if it were a taxed receipt for the purposes of the tenant's relief provisions.

• Where a corporate landlord was taxed under the old ICTA rules (sections 34 or 35) on a lease premium or an assignment at undervalue for accounting periods ending after 5 April 2005 but before 1 April 2009, the resulting amount is a "corporation tax receipt" and is treated as a taxed receipt from a taxed lease
• The "receipt period" is the duration of the lease used in calculating the taxable premium (or, for an assignment at undervalue, the remaining lease duration at the date of assignment)
• The "unreduced amount" of the taxed receipt is the full amount calculated under the ICTA rules before any reductions that may have been applied where the landlord itself paid a premium to a superior landlord
• Where the tenant's obligation to carry out work under the lease gives rise to qualifying capital allowances expenditure, that element of work is excluded when calculating the unreduced amount, to avoid the tenant receiving double relief