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Chapter BIM41055

Document Cited authorities 1 Cited in Related
Vincent
Published date22 November 2013
Record NumberBIM41055

S101, S311 Income Tax (Trading and Other Income) Act 2005, S98, S250 Corporation Tax Act 2009

A reverse premium is treated as a revenue receipt for Income Tax and Corporation Tax purposes. Where the recipient is granted the lease for the purposes of a trade (including one which has not yet commenced), the reverse premium is a trade receipt.

In all other circumstances, a reverse premium is a receipt of a property business. This is the most common situation.

This means that a reverse premium is automatically taxed as a business receipt in accordance with generally accepted accounting practice.

A reverse premium may be received by the person who takes the lease, or by someone connected with that tenant. It is always treated as a trade receipt or property business receipt of the person who receives it. See BIM41130 for the meaning of ‘connected person’.

A reverse premium is treated as a property business receipt in a variety of circumstances. Examples are amounts received:

  • by an intermediate landlord for a property to be let in a rental business;
  • by a person for premises to be occupied by that person other than for the purposes of a...

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