CISR14047 | The Scheme: construction operations: Payments made by landlord to tenant payments – Overview

A landlord will sometimes make a payment to a tenant in connection with a lease. Many of these payments are now treated as falling outside the definition of a contract payment either under SI2005/2045 Regulation 20A (CISR14048) or Regulation 20 (see CISR14040). Not all payments made by landlords to tenants for construction operations fall outside the scope of CIS because both Regulations 20 and 20A have strict conditions needed to be met for them to apply.

Prior to 6 April 2024, payments made by commercial landlords to tenants were within the scope of the CIS for building works that are the responsibility of the landlord. Others were exempt, principally those directly for the tenant’s benefit paid as an inducement to enter a lease (reverse premiums) under Regulation 20. Guidance on Regulation 20 can be found at CISR14040.

Regulation 20A does not replace Regulation 20 but rather, supplements it. Regulation 20A does not require the payment to be made as an inducement for the tenants to enter a lease. It can apply to building works that are the responsibility of the landlord and where the landlord also benefits from the works if the conditions are met.

If all of a payment meets the conditions of Regulation 20A or Regulation 20 it will not be a contract payment under the CIS. However, if only part of a payment qualifies, or if none of the payment qualifies under either provision, then the payment will be a contract payment under the CIS.