0141 332 0392

Paxton House, No 11 Woodside Crescent, Glasgow, G3 7UL

Search Archive


Tax and lease premiums

Source: HM Revenue & Customs | | 28/05/2019

Where a freeholder (or landlord) of a property grants a new lease to a new tenant there are sometimes upfront payments due, usually known as a lease premium. The payments of these premiums are increasingly popular, and the tax implications can be complicated depending on the length of the lease.

For leases of 50 years or less a proportion of the premium is taxed as income. The proportion to be charged as income depends on the length of the lease. The shorter the lease, the greater the proportion to be charged. For leases of more than 50 years, the premium is treated as a capital sum and represents a capital gain by the freeholder. In this case none of the premium is treated as income. Certain other sums paid are treated like premiums. In some circumstances the tenant may be able to claim relief on the ‘income’ element of the premium paid.

A landlord may also be entitled to relief against their own rental business income for premiums paid to obtain a property that is now let, or where a lease was acquired for which an earlier tenant had paid a premium.

 

Latest News

 

Newsletter

With our newsletter, you automatically receive our latest news per e-mail and get access to the archive including advanced search options!

» Sign up for the newsletter
» Login

McAllisters is a partnership trading from Paxton House, 11 Woodside Crescent, Glasgow providing accountancy and tax services and general business advice and is a member of ICAS (Registration No 0342) and an FCA exempt professional firm (No 301235). Its VAT number is 261 3019 94

McAllisters (Scotland) Ltd is a related business providing tax and business advisory services to McAllisters and its clients. McAllisters (Scotland) Ltd is registered in Scotland (Registration number SC146856). Its VAT number is 624 0564 62.

Copyright © McAllisters 2013 – 2019

 Cookie Policy   Privacy Policy   Terms Of Use   Standard Terms of Business