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Rent-free period

I have just entered into a five-year lease for a shop and my landlord has given me a two-year rent-free period because he struggled to get a tenant. My annual rent once the rent-free period is over will be £15,000 per annum. How will I treat the rent in my accounts for the next five years

The total rent you will pay over the term of the lease will be £45,000 (being £15,000 x 3 years).

Then you simply spread this across each accounting period. Assuming your first accounting period is a full year, you will have tax relief on £9,000 each year (being £45,000 ÷ 5 years).

So even though you won’t have physically paid any rent in the first two years, you will get tax relief on £18,000.

As these figures are fairly significant, you would be advised to discuss this further with your local TaxAssist Accountants though, to ensure that the accounts and tax treatment are correct.

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