Finance Leasing Manual - FLM21.07

Old Schedule A: examples

The following examples illustrate the strict statutory entitlement basisfor recognising income under 'old' Schedule A.

Example 1

Suppose a UK resident corporate landlord owns a UK property.
For the accounting period which runs for the year to 31 December 1996 the lessor is entitled to rent of £20m under a lease of the property.

The rent is payable in respect of the occupation of the property by the lessor for the three years to 31 December 1998.

Here the rent is all charged to tax under Schedule A in the lessor's 1996 accounting period even though it relates to the use of the property over three years.

Example 2

Suppose a UK resident corporate landlord owns a UK property.
Rent of £20m under a lease of the property is payable in arrear on 31 December 1998.
The rent is payable in respect of the occupation of the property by the lessor for the three years to 31 December 1998.

In this case the rent would be taxed under Schedule A in the lessor's 1998 accounting period - subject to the anti-avoidance rules in Sections 33A and 33B ICTA 1988 (see FLM21.09).