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HMRC internal manual

Business Income Manual

Leasing: avoidance: sale and leaseback of land: charge to tax

S681BB Income Tax Act 2007, S851 Corporation Tax Act 2010

Where the leaseback rent payable is an allowable deduction in computing profits or losses of a trade or profession, the income proportion of the lump sum is to be treated as a receipt of that trade or profession.

A disposal and short-term leaseback of property will normally occur in this context, but other possibilities are provided for and in such cases the income proportion of the lump sum is subject to a stand-alone charge to Income Tax or Corporation Tax.