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HMRC internal manual

Property Income Manual

HM Revenue & Customs
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Income excluded from UK property business: wayleaves & easements: IT cases up to 2004-05 and CT cases

Electricity & gas wayleave easements

An easement is a right enjoyed by a person over land which they do not own. Landowners may receive payments for easements from electricity and gas concerns, or other similar undertakings, for easements in connection with cables pylons etc. on or over their land. The types of payment which may be made include:

  • yearly payments for easements,
  • single lump sum payments for grants in perpetuity or for a specified number of years,
  • yearly or lump sum payments for disturbance arising from the erection of pylons, relaying of mains etc.

How they are treated

a) Yearly payments for easements

  • Where a payment can be regarded as a trading receipt it will be assessable under Case I of Schedule D.
  • Where the electricity wayleave payments are received for wires and cables running over or under land which gives rise to property income assessable under Schedule A, the wayleave payments should be treated as a Schedule A receipt.
  • Otherwise the wayleave payments will be assessable under Case VI of Schedule D.

b) Single lump sum payments

These are to be regarded as capital receipts and are accordingly not chargeable to IT, though CGT liability may arise (see CG72300 onwards).

c) Payments for disturbance

Payments for disturbance do not fall under (a) above, even if they are payable under away leave agreement. Yearly payments within ICTA88/S120 will be subject to IT.

  • If they are paid to a trader (e.g. a farmer) in respect of disturbance to the trade they should be treated as Case I receipts.
  • If they are not referable to a trade, they will have arisen out of the recipient’s interest in the land and should be taxed under Schedule A.

Lump sum payments for disturbance will normally be of a capital nature (unless the payment is made to fill a hole in profits as opposed to compensate for damage).

Costs of re-instatement of land

Where there is expenditure on repairs of damage to land or buildings etc. covered by the compensation payment, this will be an allowable deduction either for Case I or Schedule A if the compensation is chargeable to IT.

Where a lump sum payment is regarded as capital, any corresponding expenditure should be excluded from the computations under Case I or Schedule A.

Wayleave or easement

The definition of ‘easement’ in ICTA88/S119 (3) which is referred to inICTA88/S120 (5) goes wider than the ordinary meaning of the word ‘easement’. Seethe comments of Uthwhat J at pages 329 and 330 of Mosley v George Wimpey Ltd [1945]27TC314.

It is not helpful to use a word that has a particular legal meaning to describe something else. So in ITTOIA05 the term ‘wayleave’ is used to describe the right in respect of which the rent is received. In practice this is how most of the payments are usually described. But the generality of the words in ICTA88/S119 (3) has not been lost.


The legislation is in ICTA88/S119 (rent etc payable in connection with mines, quarries and similar concerns) and ICTA88/S120 (rent etc payable in respect of electric line wayleaves).