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Discounted rent

03 August 2006
Issue: 4069 / Categories: Forum & Feedback

The taxation of a premium payable under a short lease is dealt with in ITTOIA 2005, Chapter 4. Section 279 deals with a sum payable 'instead of the whole or part of the rent for a period', but as far as I can see, there is no definition of a premium for the purposes of s 277. Suppose a potential tenant offers to pay a (10%) discounted rent of £21,600 in advance, rather than, say, £1,000 per month, for a two-year tenancy.

The taxation of a premium payable under a short lease is dealt with in ITTOIA 2005 Chapter 4. Section 279 deals with a sum payable 'instead of the whole or part of the rent for a period' but as far as I can see there is no definition of a premium for the purposes of s 277. Suppose a potential tenant offers to pay a (10%) discounted rent of £21 600 in advance rather than say £1 000 per month for a two-year tenancy. There is no attempt to convert income to capital which the legislation seems to be mainly aimed at but a simple commercial agreement which suits both the tenant as he would pay less and the landlord as he has the benefit of having the rent — albeit a lesser amount than he might otherwise...

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