BIM51535 - Builders, property dealers & developers: Income recognition: Ground rents: Stock-in-trade

Where a trader grants a lease of land for a period of years in return for payment of a premium, he partly realises the value of his interest in the land but does not dispose of it. The interest retained, commonly referred to as a ground rent, should continue to be dealt with as stock in trade and its cost, or lower net realisable value, brought into account accordingly (see BIM51540).

Any subsequent sale of the interest subject to the lease (or, in the case of a feudal superiority, its redemption) should be treated as giving rise to a trading receipt.

If such an asset is still owned at the time of the discontinuance of the trade, the provisions of ICTA88/S100 (S173 ITTOIA) and ICTA88/S102 (S186 ITTOIA) should be applied.