Income Tax (Trading and Other Income) Act 2005 section 294

Restrictions on section 292 expenses: lease of part of premises

Section 294 deals with how the tenant's deemed expense relief under sections 292 and 293 is adjusted when the tenant has granted a sublease over only part of the premises covered by the original taxed lease.

• Where a sublease covers only part of the premises subject to the taxed lease and a lease premium receipt arises that has been reduced by reference to a taxed receipt, the expense relief rules in sections 292 and 293 must be applied separately to the sublet part and to the remainder of the premises.
• If more than one sublease has been granted over different parts of the premises, sections 292 and 293 are applied separately to each sublet part and to whatever portion of the premises is not sublet.
• When applying sections 292 and 293 to a particular part of the premises, the starting figure (known as "A" — the unreduced amount of the taxed receipt) is scaled down by multiplying it by the fraction that the relevant part represents of the whole premises.
• The fraction used to apportion the taxed receipt between the different parts of the premises must be calculated on a just and reasonable basis.