This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.
Analytics

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.

Essential

Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet

Termination of lease

Herbs16
Posts: 68
Joined: Wed Aug 06, 2008 3:53 pm

Termination of lease

Postby Herbs16 » Thu Sep 12, 2019 2:02 pm

Hi
My friend owns a company which owns a property, this property leases to a shop who has terminated the 10 year lease early and they have paid a large sum to settle.

Is this whole sum taxable at 19% CT? any reliefs?
Thanks

jerome.lane
Posts: 30
Joined: Mon Aug 12, 2019 8:41 am
Location: Camberley, Surrey
Contact:

Re: Termination of lease

Postby jerome.lane » Fri Sep 13, 2019 11:39 am

Generally, where the lease is for a period of less than 50 years, the amount of the receipt is given by the formula–

(S×(50 − Y))/50

S is the sum payable instead of rent
Y is the number of complete periods of 12 months (other than the first) comprised in the period in relation to which the sum is payable.

The company could consider making pension contributions or other investments qualifying for relief to mitigate the tax payable. It depends if the company does anything else.
Jerome Lane
Tax Advisor
jerome.lane@stewartco.co.uk
Stewart&Co.
Chartered Accountants
Telephone: 01276 61203


Return to “Property Taxation”