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HMRC internal manual

Business Income Manual

Measuring the profits (particular trades): Mineral extraction: royalties relief: mixed payments

S157, S314 and S340 Income Tax (Trade and Other Income) Act 2005, S135, S258 and S273 Corporation Tax Act 2009

Mineral royalties relief has been withdrawn in respect of royalties that a person is entitled to receive on or after 1 April 2013 in respect of businesses subject to Corporation Tax and 6 April 2013 in respect of businesses subject to Income Tax.

In the case of royalties receivable before those dates, the Mineral Royalties (Tax) Regulations 1971, SI 1971/1035, provided for apportionment where royalties related both to winning and working minerals so qualifying for relief and also to other matters. These could have included, for example, exploration as opposed to exploitation, rents and wayleaves for use of land giving access to the workings or for the use of services (water, electricity etc) and rent for land on which plant or buildings were used for the treatment or conversion of minerals. Qualifying royalties were limited to those which could reasonably have been expected to be payable under the agreement:

  1. if it conferred only the right to carry out specified operations in relation to minerals in or under the land to which the agreement relates,


  1. as if any buildings, structures, roads, shafts, adits or other works existing on the land at the commencement of the agreement did not exist.

Where 90% or more of the royalties qualified, however, no apportionment was made.

HMRC would generally accept an apportionment suggested by the taxpayer or agent if it appeared to be reasonable in the light of the agreement and any other available information available.