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HMRC internal manual

Business Leasing Manual

’Income-into-capital’ schemes and back loaded leases: Relief for set-offs against rentals: cumulative accountancy rental excess: introduction

The relief for cumulative accountancy rental excess is intended to ensure that there is no double taxation of the lessor’s return from the lease. This is achieved by the set-off of the excess against taxable rents (CTA10/SS906-910) and against capital gains disposal proceeds (TCGA92/S37A).

The relief is central to the way Part 21 of CTA 2010 operates and excesses need to be tracked for any lease where the measure of taxable rents for any period is accountancy rental earnings, that is where negative depreciation is recognised in the accounts drawn up under GAAP.