Income Tax (Trading and Other Income) Act 2005 section 298

Taking account of deductions for rent as a result of section 37(4) or 87(2) of ICTA

Section 298 ensures that deemed rent deductions originally claimed by companies under older ICTA provisions are properly recognised when calculating the limits on lease premium relief under the ITTOIA 2005 framework.

• This transitional provision applies to company accounting periods ending after 5 April 2005 but before 1 April 2009, bridging the gap between the ICTA and ITTOIA regimes.
• Where a company tenant was deemed to pay rent under ICTA section 87(2) when calculating trading profits, and the corresponding landlord's receipt is a taxed receipt under ITTOIA Chapter 4, the deemed rent deduction is treated the same as a deduction under section 61 of ITTOIA.
• Where a company tenant in a property business was deemed to pay rent under ICTA section 37(4) by reference to the amount chargeable on a superior interest, and that amount is a taxed receipt under ITTOIA Chapter 4, the deemed rent deduction is treated the same as a deduction under section 292 of ITTOIA.
• In both cases, the deemed rent deductions feed into the calculations under sections 290 and 295 of ITTOIA that limit the total reductions and deductions available in respect of a taxed lease premium receipt.