BIM61345 - Leasing: avoidance: sale and leaseback of land: assessment

Where the leaseback rent payable is an allowable deduction in computing profits or losses of a trade or profession, the income proportion of the lump sum is to be treated as a receipt of that trade or profession.

A disposal and short-term leaseback of property will normally occur in this context, but as in ICTA88/S779, other possibilities are provided for and in such cases the charge is under:

  • Case VI of Schedule D for CT cases (and IT cases up to 2004/05), and
  • ICTA88/S780 (3A) (a) for IT cases (for 2005/06 onwards).