Payment to get out of a lease

Payment to get out of a lease

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A Ltd has the head lease on a building. It sub-let part to B Ltd in October 2001, on a 25 year lease at £18,000 per year. In early 2005, B Ltd paid £73,000 to A Ltd in consideration of the lease being cancelled.

Our concern is the tax treatment of this £73,000 in A Ltd. I have been unable to find something covering this situation and would be grateful for any pointers.

Brian

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By User deleted
20th Apr 2006 16:34

Isn't it a premium?
I think it qualifies as the recepit of a premium under s34 ICTA 1988 so you may have to apportion it between rents and capital gains.

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By AnonymousUser
21st Apr 2006 10:50

Thanks Peter,
I have had a look at s34 ICTA 88, and s34(5) in particular seems to cover it.

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By AnonymousUser
20th Apr 2006 15:04

income
would have thought that this woud be treated in exactly the same way as the rent would have been as it is income derived from the letting of a property

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