Taxes Consolidation Act 1997 section 103

Deduction by reference to premiums, etc paid in computation of profits for purposes of this Chapter

Section 103 allows a tenant who has paid a premium on a lease to claim a tax deduction when subletting the property, and sets out how that deduction is calculated and spread over time.

• A tenant who sublets premises and has paid a premium to their landlord can treat a portion of that premium as notional rent, deductible in computing their Case V income from the subletting.
• The deduction is spread over a "relevant period" which depends on how the premium arose — the lease term (section 98), the remaining lease term at assignment (section 99), or the period between sale and agreed reconveyance (section 100).
• Where the tenant acts as an intermediate landlord and is themselves chargeable on a premium received from a sub-tenant, the charge is reduced by the appropriate fraction of the amount already charged on the superior landlord, to avoid double taxation.
• If only part of the premises is sublet, or if a reconveyance takes place at a different price or date than originally assumed, appropriate adjustments and apportionments are made.