PIM1117 - Wayleaves and other income: Rent receivable in connection with mines, quarries and similar concerns
Source: gov.uk (2025-02-04)


Chapter 8 of ITTOIA05 and Chapter 7 of CTA09

Rent receivable in connection with mines, quarries and similar concerns

ITTOIA05/S335 (income tax) and CT09/270 (corporation tax) charge tax on 'rent receivable in connection with’ a ‘concern' listed in either ITTOIA05/S12(4) or CTA09/39(4), which are:

mines and quarries (including gravel pits, sand pits and brick fields),

ironworks, gasworks, salt springs or works, alum mines or works and waterworks and streams of water,

canals, inland navigations, docks and drains or levels,

rights of fishing,

rights of markets and fairs, tolls, bridges and ferries,

railways and other kinds of way, and

other concerns similar to those above.

The profits are treated as if they arise from a trade. Although the profits arise from use of land, they may not fall within the category of ‘generating income from land’; however the legislation clarifies that they are to be treated as trading, not property, profits.

What rent is receivable in connection with a section 12(4) or 39(4) concern

Rent is receivable in connection with a UK section 12(4) or 39(4) concern if it is receivable in respect of an estate, interest or right in or over land in the UK, and either:

the estate, interest or right is used, occupied or enjoyed in connection with a ‘concern’, or

the lease or other agreement under which rent is receivable provides for that rent to be recouped by reducing royalties or similar payments, and the reduction applies if the estate, interest or right is used, occupied or enjoyed in connection with a ‘concern’.

Under ITTOIA05/S336(3) and CTA09/S271(3) the meaning of 'rent' in this context includes:

any receipt that would otherwise be a receipt of a UK property business, and

any other receipt in the nature of rent.

Tax is normally charged on the full amount of the profits arising in the tax year. But where the landlord:

lets a right to work minerals in the UK and incurs management expenses, see CTM02120 (https://www.gov.uk/hmrc-internal-manuals/company-taxation-manual/ctm02120).

receives mineral royalties, see BIM62090 (https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim62090) and CG71700 (https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg71700).

Loss relief - income tax

For income tax purposes, loss relief for these concerns is given through sections 152 and 153 of the Income Tax Act 2007 (ITA07), as Chapter 8 of Part 3 of ITTOIA05 is listed in section 1016 of ITA07.

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 8 (rent receivable in connection with a UK section 12(4) concern),

is dealt with under Chapter 8. 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 7 (rent receivable in connection with a UK section 12(4) concern),

is dealt with under Chapter 7. 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.

Wayleaves

If the rent is a payment for a wayleave or easement see PIM1114 (https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim1114) (income tax) or PIM1115 (https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim1115) (corporation tax).