Rent free period for existing lease

When to start allocation of the incentive

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A property lease has existed for a number of years and now a rent free period has been granted for 6 months tied in with an extension of a break clause date, but no change to the headline rent itself. 

Under FRS102 the rent free period should be spread over the life of the lease.  The rent free accrual to be created and subsequent release are straightforward enough but does it need to be calculated from the date when the rent free period begins or should it to be back-dated over the whole life of the lease?

Most guidance refers to an incentive at the start of the lease but nothing on mid-term incentives.

Replies (4)

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By Duggimon
31st Mar 2021 10:33

If you wanted to backdate it you would have to amend prior year accounts and tax returns. Just allocate it across the remaining life of the lease.

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Replying to Duggimon:
By dionnerey99
31st Mar 2021 10:41

I thought that would make the most sense, thank you.

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John Toon
By John Toon
31st Mar 2021 10:44

If this is a COVID related rent free/lease extension you may want to refer here:

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By paul.benny
31st Mar 2021 10:53

deleted -duplicates other post

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