Finance Leasing Manual - FLM32.25

Normal rent: when it accrues

There is no generally applicable parallel provision in Schedule 12 FA 1997 deeming 'normal rent' to accrue evenly over the period of the lease in question falling in a period of account.

In the case of rentals forming part of a lessor's Schedule D Case I trading income Section 72 ICTA (see IM 1247) will apply instead, often with the same result.

But in the case of rental income within Schedule A for corporation tax 'normal rent' will be recognised on the date on which the lessor becomes entitled to it. For the purposes of Paragraph 5 there is no equivalent of Paragraph 3(6) deeming income under Schedule A to accrue evenly for the purpose of applying the fourth of the five conditions which have to be satisfied before a lease comes within Part I (see FLM31.57).