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
Replies (3)
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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.