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Nominal leases or peppercorn rents

Produced by Tolley in association with of Crane Dale Tax, part of AMS Group
Owner-Managed Businesses
Guidance

Nominal leases or peppercorn rents

Produced by Tolley in association with of Crane Dale Tax, part of AMS Group
Owner-Managed Businesses
Guidance
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Outline

This guidance note summarises the implications of nominal or peppercorn rents for income tax, corporation tax, CGT, SDLT and VAT purposes with links to further content.

Properties let at a minimal rent are also called nominal leases or peppercorn rents. This is the case where the owner of the property rents the property:

  1. •

    at a less than market value rent, or

  2. •

    by way of a ‘ground rent’ on a long lease

Both will be taxable as property income. In the former case, an uncommercial rent may also have wider tax implications to consider.

Ground rents are a distinct charge from the leasehold charge. Ground rents will generally be regarded as being charged on commercial terms, even though they are generally negligible (or often not charged or collected) as they do not necessarily relate to any service provided to a leaseholder.

Note that companies within the transfer pricing regime may also have to consider the transfer pricing provisions if a property is

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Rob Durrant-Walker
Rob Durrant-Walker

Tax Director at Crane Dale Tax , Corporate Tax, OMB, Personal Tax


Rob is a cross-tax advisor with a particular focus on property tax planning, and business structure planning for OMB’s. He provides tax advice to other accounting firms, balancing commerciality, ethics, and understanding complexity. His 30+ years of experience start at the Inland Revenue in Hull. After completing his ATT and CTA by 1999 with PKF, he subsequently worked at KPMG and UHY prior to managing the business tax team as a director at Garbutt + Elliott. Rob is now Tax Director at the independent tax consultancy, Crane Dale Tax. He is a regular author for Taxation magazine with many articles and Readers Forum contributions since 2005, and he contributes as a virtual member to the CIOT Property Tax technical committee. Rob works remotely from Vancouver in Canada.

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