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HMRC internal manual

Property Income Manual

From
HM Revenue & Customs
Updated
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Income excluded from UK property business: rent receivable from UK electric-line wayleaves: IT cases for 2005-06 onwards

Rent receivable for UK electric-line wayleaves

ITTOIA05/S344 charges tax on ‘rent receivable for UK electric-line wayleaves’, that is:

  • the rent is receivable in respect of an easement, servitude or right in or over land in the UK, and
  • the easement, servitude or right is enjoyed in connection with an electric, telegraph or telephone wire or cable.

ITTOIA05/S345 (2) 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.

In this context ‘apparatus’ will include any transformer.

The meaning of ‘rent’ in this context is extended by ITTOIA05/S345 (3) to include:

  • any receipt that would otherwise be a receipt of a UK property business, and
  • any other receipt in the nature of rent.

Alternative basis of charge

ITTOIA05/S346 provides that in certain circumstances the rent receivable for UK electric-line wayleaves is not chargeable under ITTOIA05/S344.

If a person:

  • carries on a UK property business in relation to some or all of the land to which the wayleave relates, and
  • receipts (other than rents receivable for UK electric-line wayleaves) in respect of some or all of that land are brought into account in calculating the profits of the UK property business for the tax year,

then the rent receivable for the UK electric-line wayleave is instead brought into account in calculating the profits of the person’s UK property business - ITTOIA05/S346.

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
  • apart from any rent or expense in respect of the wayleave, no other receipts or expenses in respect of any of the land are brought into account in calculating the profits of any property business of the trader,

then both the rent receivable for the UK electric-line wayleave and the expenses incurred may be brought into account in calculating the profits of the person’s trade - ITTOIA05/S22 (2). This is at the option of the taxpayer.

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

Priority between chapters within Part 3 of ITTOIA

Any receipt, so far as it falls within:

  • Chapter 3 so far as it relates to a UK property business, and
  • Chapter 9 (rent receivable for UK electric-line wayleaves),

is dealt with under Chapter 9.

Any receipt, so far as it falls within:

  • Chapter 8 (rent receivable in connection with a UK section 12(4) concern), and
  • Chapter 9 (rent receivable for UK electric-line wayleaves),

is dealt with under Chapter 9 - ITTOI05/S262.