Modifications etc. (not altering text)
C1 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.
(1)M1This section applies where in relation to any land used in connection with a [F1trade or profession]—
[F2(a)any amount falls to be treated as a receipt of a Schedule A business by virtue of section 34 or 35, F3. . .
(b)any amount would fall to be so treated but for the operation of section 37(2) or (3);]
[F4(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
(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 [F5and in section 87A] as “the amount chargeable”.
(2)M2Subject 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 [F6a company which is] for the time being entitled to the lease as respects which it arose, and
(b)that occupation is for the purposes of a [F7trade or profession] carried on by [F8the company],
[F9the company] shall be treated, in computing the [F10profits] of the [F7trade or profession] chargeable to [F11corporation 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.
(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)M3Where a [F12company], although not in occupation of the land or any part of the land, deals with [F13the company's] interest in the land or that part as property employed for the purposes of a [F14trade or profession] carried on by [F15the company], subsections (2) and (3) above shall apply as if the land or part were occupied by [F15the company] for those purposes.
(5)M4Where 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.
(6)M5In computing [F10profits] chargeable under Case I or II of Schedule D for any [F16accounting period], rent shall not by virtue of subsection (4) above be treated as paid by a [F17company] for any period in respect of land in so far as rent treated under section 37(4) as paid by [F18the company] for that period in respect of the land has in any previous [F16accounting period] been deducted, or falls in that [F16accounting period] to be deducted under Part II.
(7)M6Where, in respect of expenditure on the acquisition of [F19the company's] interest in the land in relation to which the amount chargeable arose, a [F20company] has become entitled to an allowance under [F21Part 5 of the Capital Allowances Act in respect of expenditure falling within section 403 (mineral asset expenditure)] for any [F22accounting period], then—
(a)if the allowance is in respect of the whole of the expenditure, no deduction shall be allowed [F23the company] under this section for that or any subsequent [F22accounting period]; or
(b)if the allowance is in respect of part only of the expenditure (“the allowable part”), a deduction allowed [F23the company] under this section for that or any subsequent [F22accounting period] shall be the fraction—
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;
F24. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(8)Where the amount chargeable arose under section 34(2) [F25or 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.
(9)M7In 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;
[F26(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)).]
[F27(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.]
(10)F28. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Textual Amendments
F1Words 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)
F2S. 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)
F3Word 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)
F4S. 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)
F5Words 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)
F6Words 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)
F7Words 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)
F8Words 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)
F9Words 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)
F10Words in s. 87(2)(6) substituted (31.7.1998) by Finance Act 1998 (c. 36), s. 46(3)(a)(b), Sch. 7 para. 1
F11Words 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)
F12Word 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)
F13Words 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)
F14Words 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)
F15Words 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)
F16Words 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)
F17Word 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)
F18Words 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)
F19Words 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)
F20Word 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)
F21Words 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
F22Words 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)
F23Words 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)
F24 Words repealed by 1990(C) s.164(4)and Sch.2.See 1989edition for these provisions.
F25Words 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)
F26S. 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)
F27S. 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)
F28S. 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
Modifications etc. (not altering text)
C2 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.
C3S. 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.
C4S. 87 excluded (8.11.1995) by Atomic Energy Authority Act 1995 (c. 37), Sch. 3 para. 9(2)
C5S. 87 excluded (24.7.1996) by Broadcasting Act 1996 (c. 55), s. 149(1)(f), Sch 7 para. 21(2) (with s. 43(6))
C6S. 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)
Marginal Citations
M1SOURCE-1970 s. 134(1); 1978 s. 32
M2SOURCE-1970 s. 134(2), (3); 1978 s. 32
M3SOURCE-1970 s. 134(4)
M4SOURCE-1970 s. 134(4)(a)
M5SOURCE-1970 s. 134(4)(b)
M6SOURCE-1970 s. 134(5), (6); 1986 Sch. 13 para. 26
M7SOURCE-1970 s. 134(1)(i), (ii)