My client bought a lease for his restaurant back in 2007. The client paid £99,000 for the lease, which expired on 25 March 2015. The client did not claim any relief. He incorporated the business into a limited company and got the lease extended for 20 years until 25 March 2035. Can my client claim lease premium relief under the limited company? If he can claim, how much would it be per annum? 

Arthur replies: 

Yes, as the tenant you can claim relief for the premium paid. HMRC’s Business Income Manual (at BIM46251) states: "The amount of the expense is based on the ‘taxed receipt’ of the landlord, which is…so much of the premium as is treated as a receipt of the landlord…broadly, the taxed receipt is spread across the ‘receipt period’ (usually the term of the lease) on a daily basis, and the trader is treated as incurring a revenue expense equal to the daily amount for each day on which they occupy or use the land for the purposes of the trade." See HMRC’s guidance at BIM46255 for an example of the calculation.