SolvedBLM72030 | ’Income-into-capital’ schemes and back loaded leases: Relief for set-offs against rentals: cumulative accountancy rental excess: example 1
From HM Revenue & Customs · Business Leasing Manual
Example
The simple example below, covering the first six years of a lease, illustrates the carry forward and set off of cumulative accountancy rental excesses (‘CARE’). There is a more complex example involving also cumulative normal rental excesses in BLM72065.
| Period | ‘Normal rent’ | ‘Accountancy rental earnings’ | Taxable before relief for cumulative accountancy rental excess b/f | Relief for cumulative accountancy rental excess b/f | Taxable after relief for cumulative accountancy rental excess b/f | Cumulative accountancy rental excess b/f |
|---|---|---|---|---|---|---|
| 1 | 500 | 1200 | 1200 (ARE) | Nil | 1200 | 700 |
| 2 | 800 | 1300 | 1300 (ARE) | Nil | 1300 | 700+500=1200 |
| 3 | 1200 | 1400 | 1400 (ARE) | Nil | 1400 | 1200+200=1400 |
| 4 | 1700 | 1500 | 1700 (NR) | 200* | 1500 | 1400-200=1200 |
| 5 | 2300 | 1500 | 2300 (NR) | 800* | 1500 | 1200-800=400 |
| 6 | 3000 | 1300 | 3000 (NR) | 400 | 2600 | 400-400=nil |
| Total | 9500 | 9500 |
*restricted to excess of normal rent over accountancy rental earnings.