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HMRC internal manual

Business Income Manual

HM Revenue & Customs
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Specific deductions: rent and rates: miscellaneous

Commuted rent

In the case of Cowcher v Richard Mills and Co Ltd [1927] 13 TC 216, it was argued that a payment to remove future liability to payments of commuted rent should be allowed as a deduction since previous payments of commuted rent had been allowed as deductions. The payment to remove the future liability was ruled inadmissible, but it is also clear from the decision that the earlier payments of commuted rent should not have been allowed as deductions.

Payments of commuted rent are not made for the purposes of the trade and should not be allowed as deductions in computing trade profits.

Onerous lease agreement

A lump sum payment by a tenant to vary the terms of an onerous lease agreement is not an allowable expense in computing profits (see Tucker v Granada Motorway Services Ltd [1979] 53 TC 92, which is discussed in BIM35320).

Where a premium is paid to vary the terms of a lease of land, see PIM1216 onwards.

Tied premises

The treatment of rents paid and rents receivable in respect of tied premises is governed by S19 Income Tax (Trading and Other Income) Act 2005 and S42 Corporation Tax Act 2009. As to brewers’ tied houses, see BIM51430.

Landlord abroad

Where a trader pays rent to a landlord who lives outside the UK, see PIM4800 onwards.