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HMRC internal manual

Property Income Manual

Income excluded from UK property business: wayleaves & easements: IT


Payments for wayleaves

Rent received in respect of a wayleave is taxed as property income by Chapter 3 of Part3 of ITTOIA05 (property businesses) unless it falls within:

  • Chapter 8 (rent receivable in connection with a UK section 12(4) concern), see PIM1117, or

  • Chapter 9 (rent receivable for UK electric-line wayleaves), see PIM1118.

If a single lump sum payment is received for the grant of rights in perpetuity or for a specified number of years see CG12955.

Payments for disturbance and payments for re-instatement of land are not rents receivable for wayleaves. Income receipts are assessable as property income or trading income as appropriate. Where a lump sum payment is regarded as capital, any corresponding expenditure should be excluded from the computations of trading or property income.

Alternative basis of charge

ITTOIA05/S346 provides that in certain circumstances the rent receivable for certain wayleaves may be chargeable as trading income rather than property income. This is at the option of the customer.

If a person (‘the trader’):

  • carries on a trade on some or all of the land to which a wayleave relates, and

  • rent is receivable, or expenses are incurred, by the trader in respect of the wayleave, and

  • the trader would otherwise be liable to tax under Part 3 of ITTOIA (property income) in respect of the rent for the wayleave

then both the rent receivable and the expenses incurred may be brought into account in calculating the profits of the person’s trade (ITTOIA05/S22 (3)).

The meaning of ‘rent’ in this context is extended by ITTOIA05/S22 (4) to include:

  • any receipt that would otherwise be a receipt of a UK property business or an overseas property business, and

  • any other receipt in the nature of rent.

Definition of wayleave

ITTOIA05/S22 (5) defines a wayleave to mean an easement, servitude or right in or overland which is enjoyed in connection with:

  • an electric, telegraph or telephone wire or cable,

  • a pipe for the conveyance of any thing, or

  • any apparatus used in connection with such a pipe.

ITTOIA05/S22 (6) makes it clear that the rights enjoyed include:

  • the use of a pole or pylon supporting such a wire or cable, and

  • apparatus used in connection with such a wire or cable.

ITTOIA05/S22 applies to professions and vocations as well as to trades.

ITTOIA05 changes

This represents a change in the law as respects:

  • wayleaves other than those connected with ‘electric, telegraphic or telephonic wire or cable’;

  • wayleaves relating to land outside the UK; and

  • wayleaves of a kind mentioned in ICTA88/S119 (1).