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Freehold ground rent treatment

Freehold ground rent treatment

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I have a client with an owner managed company, who collects ground rent on a number of freeholds. In March 2017 the company received £40,000 for a 120 lease extension on one of the properties.

Whilst I realise this is not revenue because the extension is more than 50 years old, can anyone advise me of the correct accounting and tax treatment for this income?

Thank you in advance for any assistance you can give.

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By bajones
26th Jul 2017 08:38

Topical! Is it David Cameron's brother in law?

The answer is here (excuse the long link):

https://www.gov.uk/government/publications/land-and-leases-the-valuation...

(Hint: it's not income or revenue)

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Replying to bajones:
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By WillowTree
26th Jul 2017 08:59

Thanks for the speedy response. So even if its extending an existing lease rather than a new lease, it still comes under the grantng of lease rules?

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By bajones
26th Jul 2017 09:36

Yes, because by extending it, the Honourable William Waldorf Astor is making a part disposal of an interest in the land, i.e. the additional period.

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