Income Tax (Trading and Other Income) Act 2005 section 297

Taking account of reductions in corporation tax receipts

Section 297 ensures that where a company receives a reduction in its corporation tax property receipt because a premium has already been taxed at a higher level in the lease chain, that reduction is properly tracked and coordinated with the income tax relief rules in this Chapter.

• Where a corporation tax property receipt is reduced because a premium has already been taxed on a superior interest, and that taxed amount falls within this Chapter, the reduction must be taken into account alongside income tax reliefs
• The "reduction" is defined as the difference between the corporation tax receipt calculated before and after the relief, to the extent it relates to the amount already taxed on the superior interest
• Corporation tax reductions of this kind count towards the overall cap on reliefs, being included in the "unused amount" and "limit on reductions and deductions" calculations alongside income tax reductions
• The corporation tax receipt is treated as a lease premium receipt for the purpose of the tenant expense rules, with its receipt period being either the deemed lease duration (for premiums under ICTA section 34) or the remaining lease term at the date of assignment (for assignments under ICTA section 35)

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