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HMRC internal manual

Business Income Manual

Specific deductions: premiums: prevention of double allowance

S60(5), S290(3)(4) Income Tax (Trading and Other Income) Act 2005, S62(5), S230(3)(4) Corporation Tax Act 2009

The deduction for a premium on a taxed lease is restricted if the lease is a taxed lease because of the tenant’s obligation to carry out work and that obligation includes the carrying out of work which qualifies for capital allowances.

The taxed receipt is calculated as if the obligation had not included the carrying out of the work qualifying for allowances.

This rule should also be regarded as applying where renewals allowance was claimed as an alternative to capital allowances (BIM46960).

No trading deduction should be allowed in respect of a payment which the tenant is required to make to the landlord for assets qualifying for capital allowances (or, alternatively, renewals allowance), notwithstanding that the lessor is chargeable under the lease premium rules, by reference to the excess of the payment over the actual worth of the asset.