Corporation Tax Act 2009 (c. 4)

Part 4 U.K. Property income

Chapter 7 U.K. Rent receivable in connection with a UK section 39(4) concern

Mineral royalties U.K.

273 Relief in respect of mineral royalties U.K.

(1) This section applies if in an accounting period—

(a) a UK resident company is entitled to receive mineral royalties under a mineral lease or agreement, and

(b) the royalties are chargeable to tax under this Chapter.

(2) In calculating the amount of the royalties so chargeable, the company is treated as—

(a) entitled to receive only half of the total of the royalties arising under the lease or agreement in the accounting period, and

(b) paying in the accounting period only half of the total of the expenses mentioned in section 272(1)(b) (deduction for management expenses of owner of mineral rights).

(3) As to the meaning of “mineral lease or agreement” and “mineral royalties”, see sections 274 to 276.

(4) See also section 201 of TCGA 1992 (gains treated as accruing to a company entitled to receive mineral royalties).

274 Meaning of “mineral lease or agreement” and “mineral royalties” U.K.

(1) In this Chapter “mineral lease or agreement” means—

(a) a lease, profit à prendre, licence or other agreement conferring a right to win and work minerals in the United Kingdom,

(b) a contract for the sale, or a conveyance, of minerals in or under land in the United Kingdom, and

(c) a grant of a right under section 1 of the Mines (Working Facilities and Support) Act 1966 (c. 4) other than an ancillary right (within the meaning of that Act).

(2) In this Chapter “mineral royalties” means so much of any rent receivable under a mineral lease or agreement as relates to the winning and working of minerals.

(3) For the purposes of this section and section 276 “minerals” means all minerals and substances in or under land which are ordinarily worked for removal—

(a) by underground working, or

(b) by surface working,

but excluding water, peat, top-soil and vegetation.

275 Extended meaning of “mineral royalties” etc in Northern Ireland U.K.

(1) In the application of this Chapter to Northern Ireland references to mineral royalties include the following periodical payments.

(2) The payments are—

(a) payments of compensation under section 29 or 35 of the Mineral Development Act (Northern Ireland) 1969 (c. 35 (N.I.)) (“the 1969 Act”),

(b) payments of compensation under section 4 of the Petroleum (Production) Act (Northern Ireland) 1964 (c. 28 (N.I.)) (“the 1964 Act”),

(c) payments made as mentioned in section 37 of the 1969 Act,

(d) payments made under section 55(4)(b) of the 1969 Act, and

(e) payments made under section 11 of the 1964 Act (payments in respect of minerals to persons entitled to a share of royalties under section 13(3) of the Irish Land Act 1903 (c. 37)).

(3) In the application of this Chapter to Northern Ireland references to the mineral lease or agreement under which mineral royalties are receivable include the enactment under which those payments are made.

276 Power to determine what counts as “mineral royalties” U.K.

The Commissioners for Her Majesty's Revenue and Customs may by regulations—

(a) provide whether, and to what extent, rents receivable under a mineral lease or agreement which relate both to the winning and working of minerals and to other matters are treated as mineral royalties, and

(b) provide for treating the whole of such rents as mineral royalties if the extent to which they relate to matters other than the winning and working of minerals is small.