PIM1118 - Wayleaves and other income: Rent receivable from UK electric-line wayleaves

ITTOIA05 sections 344-348 (IT) and CTA09 sections 277-279 (CT)

Rent receivable for UK electric-line wayleaves

ITTOIA05/S344 and CTA09/S277 charge tax on rent receivable for UK electric-line wayleaves.

Under ITTOIA05/S345 and CTA09/S278 a UK electric-line wayleave means:

  • 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.

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.

Under ITTOIA05/S345(3) and CTA09/S278(3) the meaning of 'rent' includes:

  • 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 and CTA09/S279 provide that in circumstances set out below the rent receivable for UK electric-line wayleaves is not chargeable under ITTOIA05/S344 or CTA09/S277 but a receipt of a UK property business or the receipt of a trade.

Property business

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 must be brought into account in calculating the profits of the person's UK property business (ITTOIA05/S346 or CTA09/S279).

Trade

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 under ITTOIA05/S22(2) or CTA09/S45(2), by virtue of s346(3) and (4) ITTOIA05 or s279(3) and (4) CTA09.  See BIM67600 for guidance on s22 and trades, professions and vocations.

Priority between chapters within Part 3 of ITTOIA05 (ITTOI05/S262)

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, except in the circumstances described above under ‘Alternative basis of charge’.

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.

Priority between chapters within Part 4 of CTA09 (CTA09/S288)

Any receipt, so far as it falls within:

  • Chapter 3 so far as it relates to a UK property business, and

  • Chapter 8 (rent receivable for UK electric-line wayleaves),

is dealt with under Chapter 8 (CTA09/S288), except in the circumstances described above under ‘Alternative basis of charge’.

Any receipt, so far as it falls within:

  • Chapter 7 (rent receivable in connection with a UK section 12(4) concern), and

  • Chapter 8 (rent receivable for UK electric-line wayleaves),

is dealt with under Chapter 8.