Corporation Tax Act 2009 section 66

Restrictions on section 63 expenses: lease premium receipts

Section 66 restricts the deemed trading expense a tenant can claim where a sublease has been granted out of the taxed lease and the sublease premium has already been reduced by reference to the same taxed receipt.

• Where a sublease is granted out of a taxed lease and the sublease premium (the "lease premium receipt") is reduced by reference to the original taxed receipt, the tenant's deemed daily expense under section 63 is itself restricted
• For any qualifying day falling within the receipt period of the lease premium receipt, the tenant may only claim an expense to the extent that the "daily amount" of the taxed receipt (A ÷ TRP) exceeds the "daily reduction" of the lease premium receipt (AR ÷ RRP)
• If a qualifying day falls within the receipt periods of more than one lease premium receipt, the daily reductions of all overlapping lease premium receipts are added together before comparing with the daily amount of the taxed receipt
• If the daily amount does not exceed the total daily reduction(s), no expense is treated as incurred for that qualifying day; if it does exceed, only the excess is allowable