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HMRC internal manual

Business Income Manual

Measuring the profits (particular trades): Mineral extraction: restoration expenditure: rent payable in respect of any land or easement

S335-S338 Income Tax (Trade and Other Income) Act 2005, S270-S271 Corporation Tax Act 2009

The right to lower the land surface above a mining operation, or deposit debris on it, can also be acquired by payment of annual or periodical payments, as well as by payment of a capital lump sum. The payments may be of a specified amount, or a sum based on tonnage or area worked.

These payments are so related to the exercise of the rights granted that they are regarded as rent payable in respect of any land or interest arising out of land, whether described as:

  • compensation for surface damages (Earl Fitzwilliam’s Collieries Co v Phillips [1943] 25TC430, see BIM62075), or
  • the right to let down the surface (CIR v Hope [1937] 21TC116, see BIM62080), or
  • immunity from surface damages (CIR v New Sharlston Collieries Ltd [1936] 21TC69, see BIM62085).

As such these payments will be deductible from trading profits made from working the mine. The recipients of the rent will be chargeable under the above legislation. See PIM1117.