C2.1218 Grant of short lease—exclusion of premiums taxed as income
Where a premium is required under a lease of land which is a short lease, that is it has a duration which does not exceed 50 years, a landlord is treated as receiving when the lease is granted an amount of rent (additional to any actual rent) equal to the amount of the premium reduced by one-fiftieth for each complete year, less one, comprised in the duration of the lease1.
The same treatment applies to payments treated as premiums ('deemed premiums')2.
The landlord is taxed as income on an increased amount3. If the recipient is not the landlord, he is taxed in respect of the premium to income or corporation tax as income of a UK property business4.
There is a general rule that an amount included in computing profits or losses for income tax or corporation tax purposes is not to be taken into account for capital gains purposes5; this rule does not apply where a premium is taxed as income6. The whole of the amount of a premium is