Section 217 — Corporation Tax Act 2009: Lease premiums

Lease premiums 217 1 This section applies if a premium is required to be paid—

a under a short-term lease, or b otherwise under the terms subject to which a short-term lease is granted.

2 The company to which the premium is due is treated as—

a entering into a transaction mentioned in section 205 (if the land to which the lease relates is in the United Kingdom) or section 206 (if that land is outside the United Kingdom),

and b receiving the amount calculated under subsections (4) and (5) as a result of that transaction.

3 That amount is brought into account as a receipt in calculating the profits of the property business which consists of or includes that transaction for the accounting period in which the lease is granted.

4 The amount of the receipt is given by the formula— P × 50 - Y 50 where— P is the premium, and Y is the number of complete periods of 12 months (other than the first) comprised in the effective duration of the lease.

5 But, if the rule in section 228 (the additional calculation rule) applies, the amount given by the formula in subsection (4) is reduced by the amount calculated in accordance with section 228.