For the treatment of lease premium deductions, see B2.447. There are several other payment types that can arise whilst a tenant is subject to a lease agreement and it is necessary to determine whether these payments are allowable for tax purposes. Such payments are often capital in nature and will not be allowable.
Improvement costs under a lease
Where a tenant undertakes an obligation under a lease to renovate the premises following the grant of the lease, the expenditure incurred is likely to be capital expenditure. Similarly, sums paid by a tenant to reimburse the landlord for costs incurred on improvements have also been held to be capital payments.
Agreeing, renewing and terminating leases
In Strump1, no deduction was allowed for a lump sum paid to secure the renewal of a lease of business premises for five years at the same rent. Nor was a deduction allowable for a premium payable by quarterly instalments which were to cease if the lease were terminated.
In Staveley Coal and Iron Co Ltd2, a colliery
To continue reading
View the latest version of this document, as well as thousands of others like it, sign in to Tolley+™ Research or register for a free trial
Web page updated on 17 Mar 2025 15:57