PIM1118 - Income excluded from UK
property business: rent receivable from UK electric-line wayleaves:
IT cases for 2005-06 onwards
Rent receivable for UK electric-line wayleaves
ITTOIA05/S344 charges tax on ‘rent receivable for UK
electric-line wayleaves’, that is:
- the rent is receivable in respect of an
easement, servitude or right in or over land in the UK, and
- the easement, servitude or right is
enjoyed in connection with an electric, telegraph or telephone wire
or cable.
ITTOIA05/S345 (2) makes it clear that the rights enjoyed
include:
- the use of a pole or pylon supporting such
a wire or cable, and
- apparatus used in connection with such a
wire or cable.
In this context ‘apparatus’ will include any
transformer.
The meaning of ‘rent’ in this context is extended
by ITTOIA05/S345 (3) to include:
- any receipt that would otherwise be a
receipt of a UK property business, and
- any other receipt in the nature of
rent.
Alternative basis of charge
ITTOIA05/S346 provides that in certain circumstances the rent
receivable for UK electric-line wayleaves is not chargeable under
ITTOIA05/S344.
If a person:
- carries on a UK property business in
relation to some or all of the land to which the wayleave relates,
and
- receipts (other than rents receivable for
UK electric-line wayleaves) in respect of some or all of that land
are brought into account in calculating the profits of the UK
property business for the tax year,
then the rent receivable for the UK electric-line wayleave is
instead brought into account in calculating the profits of the
person’s UK property business – ITTOIA05/S346.
If a person (‘the trader’):
- carries on a trade on some or all of the
land to which a wayleave relates, and
- rent is receivable, or expenses are
incurred, by the trader in respect of the wayleave, and
- apart from any rent or expense in respect
of the wayleave, no other receipts or expenses in respect of any of
the land are brought into account in calculating the profits of any
property business of the trader,
then both the rent receivable for the UK electric-line wayleave
and the expenses incurred may be brought into account in
calculating the profits of the person’s trade –
ITTOIA05/S22 (2). This is at the option of the taxpayer.
ITTOIA05/S22 applies to professions and vocations as well as
to trades.
Priority between chapters within Part 3 of ITTOIA
Any receipt, so far as it falls within:
- Chapter 3 so far as it relates to a UK
property business, and
- Chapter 9 (rent receivable for UK
electric-line wayleaves),
is dealt with under Chapter 9.
Any receipt, so far as it falls within:
- Chapter 8 (rent receivable in connection
with a UK section 12(4) concern), and
- Chapter 9 (rent receivable for UK
electric-line wayleaves),
is dealt with under Chapter 9 – ITTOI05/S262.
