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Where Taxpayers and Advisers Meet

Service charge accounts- lease premium received

practiceperson
Posts:3
Joined:Sun Feb 26, 2017 4:40 pm
Service charge accounts- lease premium received

Postby practiceperson » Wed Mar 01, 2017 2:39 pm

I am preparing a set of service charge accounts. In line with Tech 3/11 I do a set of service charge accounts and then a separate dormant set of accounts, the latter of which is submitted to companies house.
In the service charge bank account in the year I am doing, they received a lease premium of £7k. Is this subject to corporation tax or not? Is it subject to CGT? The residents might get a shock when they have to pay £1400.
Usually there is no CT unless bank interest is at such a level to result in the CT liability being more than £100. This is the first time I have come across the receipt of a lease premium into the service charge bank. The lease was for 999 years.
Thanks in advance

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: Service charge accounts- lease premium received

Postby maths » Wed Mar 01, 2017 3:46 pm

A lease premium arises on the grant of a lease out of a freehold or superior lease payable by the tenant to the landlord.

Any tax liability is thus that of the landlord.

The fact that the premium monies appear to have been deposited into the service charge bank account I would suggest is irrelevant to the above.

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: Service charge accounts- lease premium received

Postby bd6759 » Wed Mar 01, 2017 5:37 pm

Unless the company is the freeholder... ?


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