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HMRC internal manual

Employment Income Manual

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HM Revenue & Customs
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Living accommodation: lease premium cases: calculating the amount to be attributed in respect of a lease premium: general explanation

See EIM11444 for an overview of the changes made by Section 71 FA 2009 and EIM11445 for details of the conditions that need to be satisfied before an amount in respect of a lease premium can be attributed to a relevant period.

In this guidance:

  • “P” is the person at whose cost the accommodation is provided
  • “the relevant period” is the whole or part of the “taxable period” (see EIM11428)
  • the net amount payable by P in relation to the lease by way of lease premium is the total amount (if any) that has been paid, or is or will become payable, by P in relation to the lease by way of lease premium, less any of that amount that has been repaid or is or will become repayable.

Section 105A(2) ITEPA sets out the formula for finding the amount to be attributed to the relevant period in respect of a lease premium:

  • A/B * C where

    • A is the relevant period (in days)
    • B is the term of the lease (in days)
    • C is the net amount payable by P in relation to the lease by way of lease premium

The rules are modified where the lease contains a relevant break clause - see EIM11448. See EIM11447 for an example of how the rules apply where the lease does not contain a relevant break clause.