BIM62035 - Mineral extraction: restoration expenditure: rent payable in respect of any land or easement

The right to lower the land surface above a mining operation, or deposit debris on it, can also be acquired by payment of annual or periodical payments, as well as by payment of a capital lump sum. The payments may be of a specified amount, or a sum based on tonnage or area worked.

These payments are so related to the exercise of the rights granted that they are regarded as rent payable in respect of any land or easement, within the meaning of ICTA88/S119, whether described as:

• compensation for surface damages (Earl Fitzwilliam's Collieries Co v Phillips 25TC430, see BIM62075), or
• the right to let down the surface (CIR v Hope 21TC116, see BIM62080), or
• immunity from surface damages (CIR v New Sharlston Collieries Ltd 21TC69, see BIM62085).

For mining rents within ICTA88/S119, paid before 1 May 1995, there is a requirement to deduct income tax and a Schedule D Case I deduction is denied by ICTA88/S74 (1)(q) (see BIM42605).

For payments made on or after 1 May 1995 FA95/S145 removed the requirement to deduct income tax from mining rents within ICTA88/S119. Such rents are an allowable deduction unless the payment is an annual payment. In the latter case a deduction is denied ICTA88/S74 (1)(m).