PART IV PROVISIONS RELATING TO THE SCHEDULE D CHARGE

CHAPTER V COMPUTATIONAL PROVISIONS

Deductions

87 Taxable premiums etc.
(1) This section applies where in relation to any land used in connection with a trade or profession—
(a) any amount falls to be treated as a receipt of a Schedule A business by virtue of section 34 or 35, . . .
S. 87(1)(a)(b) substituted (with effect in accordance with s. 38(2)(3) of the amending Act) by Finance Act 1998 (c. 36), Sch. 5 para. 34 (with Sch. 5 para. 73)
Word at the end of s. 87(1)(a) repealed (6.4.2005 with effect in accordance with s. 883(1) of the repealing Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 62(2)(b), Sch. 3 (with Sch. 2)
(b) any amount would fall to be so treated but for the operation of section 37(2) or (3);
(c) any amount falls to be treated as a receipt of a UK property business by virtue of any of sections 277 to 282 of ITTOIA 2005 (receipts in respect of lease premiums, sums payable instead of rent, for surrender of lease and for variation or waiver of term of lease and assignments), or
S. 87(1)(c)(d) inserted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 62(2)(c) (with Sch. 2)
(d) any amount would fall to be so treated but for the operation of the rule in section 288 of that Act (the additional calculation rule),
and that amount is referred to below and in section 87A as “the amount chargeable”.
S. 87(1) modified (with effect in accordance with s. 39(4)(5) of the modifying act) by Finance Act 1995 (c. 4), Sch. 6 para. 14(1)
SOURCE-1970 s. 134(1); 1978 s. 32
Words in s. 87(1) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 62(2)(a) (with Sch. 2)
Words in s. 87(1) inserted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 62(2)(d) (with Sch. 2)
(2) Subject to subsections (3) to (8) below, where—
(a) during any part of the relevant period the land in relation to which the amount chargeable arose is occupied by a company which is for the time being entitled to the lease as respects which it arose, and
Words in s. 87(2)(a) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 62(3)(a) (with Sch. 2)
(b) that occupation is for the purposes of a trade or profession carried on by the company,
Words in s. 87(2) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 62(3)(b) (with Sch. 2)
Words in s. 87(2)(b) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 62(3)(c) (with Sch. 2)
the company shall be treated, in computing the profits of the trade or profession chargeable to corporation tax under Case I or II of Schedule D, as paying in respect of that land rent for the period (in addition to any actual rent), becoming due from day to day, of an amount which bears to the amount chargeable the same proportion as that part of the relevant period bears to the whole.
SOURCE-1970 s. 134(2), (3); 1978 s. 32
Words in s. 87(2) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 62(3)(d) (with Sch. 2)
Words in s. 87(2)(6) substituted (31.7.1998) by Finance Act 1998 (c. 36), s. 46(3)(a)(b), Sch. 7 para. 1
Words in s. 87(2) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 62(3)(e) (with Sch. 2)
(3) As respects any period during which a part only of the land in relation to which the amount chargeable arose is occupied as mentioned in subsection (2) above, that subsection shall apply as if the whole were so occupied, but the amount chargeable shall be treated as reduced by so much thereof as, on a just apportionment, is attributable to the remainder of the land.
(4) Where a company, although not in occupation of the land or any part of the land, deals with the company's interest in the land or that part as property employed for the purposes of a trade or profession carried on by the company, subsections (2) and (3) above shall apply as if the land or part were occupied by the company for those purposes.
SOURCE-1970 s. 134(4)
Word in s. 87(4) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 62(4)(a) (with Sch. 2)
Words in s. 87(4) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 62(4)(b) (with Sch. 2)
Words in s. 87(4) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 62(4)(c) (with Sch. 2)
Words in s. 87(4) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 62(4)(d) (with Sch. 2)
(5) Where section 37(2) and (3) has effect in relation to a lease granted out of the interest referred to in subsection (4) above, subsections (5) and (6) of that section shall apply for modifying the operation of subsections (2) and (3) above as they apply for modifying the operation of subsection (4) of that section.
SOURCE-1970 s. 134(4)(a)
(6) In computing profits chargeable under Case I or II of Schedule D for any accounting period, rent shall not by virtue of subsection (4) above be treated as paid by a company for any period in respect of land in so far as rent treated under section 37(4) as paid by the company for that period in respect of the land has in any previous accounting period been deducted, or falls in that accounting period to be deducted under Part II.
SOURCE-1970 s. 134(4)(b)
Words in s. 87(6) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 62(5)(a) (with Sch. 2)
Word in s. 87(6) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 62(5)(b) (with Sch. 2)
Words in s. 87(6) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 62(5)(c) (with Sch. 2)
(7) Where, in respect of expenditure on the acquisition of the company's interest in the land in relation to which the amount chargeable arose, a company has become entitled to an allowance under Part 5 of the Capital Allowances Act in respect of expenditure falling within section 403 (mineral asset expenditure) for any accounting period, then—
(a) if the allowance is in respect of the whole of the expenditure, no deduction shall be allowed the company under this section for that or any subsequent accounting period; or
Words in s. 87(7) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 62(6)(d) (with Sch. 2)
(b) if the allowance is in respect of part only of the expenditure (“the allowable part”), a deduction allowed the company under this section for that or any subsequent accounting period shall be the fraction—
A-BA
of the amount which apart from this subsection would fall to be deducted, where—
A is the whole of the expenditure, and
B is the allowable part of the expenditure;
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SOURCE-1970 s. 134(5), (6); 1986 Sch. 13 para. 26
Words in s. 87(7) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 62(6)(a) (with Sch. 2)
Word in s. 87(7) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 62(6)(b) (with Sch. 2)
Words in s. 87(7) substituted (with effect in accordance with s. 579 of the amending Act) by Capital Allowances Act 2001 (c. 2), Sch. 2 para. 18
Words in s. 87(7) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 62(6)(c) (with Sch. 2)
Words repealed by 1990(C) s.164(4)and Sch.2.See 1989edition for these provisions.
(8) Where the amount chargeable arose under section 34(2) or under section 277 of ITTOIA 2005 by virtue of section 278 of that Act (amount treated as lease premium where work required) by reason of an obligation which included the carrying out of work in respect of which any capital allowance has fallen or will fall to be made, this section shall apply as if the obligation had not included the carrying out of that work and the amount chargeable had been calculated accordingly.
Words in s. 87(8) inserted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 62(7) (with Sch. 2)
(9) In this section “the relevant period” means—
(a) where the amount chargeable arose under section 34, the period treated in computing that amount as the duration of the lease;
(b) where the amount chargeable arose under section 35, the period treated in computing that amount as the duration of the lease remaining at the date of the assignment;
(c) where the amount chargeable arose under Chapter 4 of Part 3 of ITTOIA 2005 (profits of property businesses: lease premiums etc.), its receipt period (within the meaning of that Chapter (see section 288(6)).
S. 87(9)(c) inserted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 62(8) (with Sch. 2)
SOURCE-1970 s. 134(1)(i), (ii)
(9A) In the application of this section and section 87A to Scotland—
(a) the reference to a lease being granted out of the interest referred to in subsection (4) above is to the grant of a sublease of land subject to that interest, and
(b) references to the lease so granted are to be construed as references to the sublease.
S. 87(9A) inserted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 62(9) (with Sch. 2)
(10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 87(10) repealed (with effect in accordance with s. 38(2)(3) of the repealing Act) by Finance Act 1998 (c. 36), Sch. 27 Pt. 3(4), Note
S. 87 excluded (19.9.1994) by Coal Industry Act 1994 (c. 21), s. 68(4), Sch. 4 para. 15(2) (with s. 40(7)); S. I. 1994/2189, art. 2, Sch.
S. 87 excluded (8.11.1995) by Atomic Energy Authority Act 1995 (c. 37), Sch. 3 para. 9(2)
S. 87 excluded (24.7.1996) by Broadcasting Act 1996 (c. 55), s. 149(1)(f), Sch 7 para. 21(2) (with s. 43(6))
See—1976(D) Sch.6 para.4(4)—no account to be taken of any deduction of realised development value. 1976(D)repealed by 1985 ss.93, 98(6)and Sch.27 Part Xfrom 19March 1985.1990(C) s.111—reduction of qualifying expenditure for premium relief.
See—1979(C) s.122—election to take capital gain or loss into account when asset appropriated to stock in trade.1989 ss.67-74—employee share ownership trusts.Banking Act 1987 (c.22) s.66—contributions to the Deposit Protection Fund.