The payment of a reverse premium constitutes capital expenditure and is therefore not deductible in calculating the landlord’s rental profits (see 6.6.3). There are no “mirroring” provisions whereby the landlord is deemed to have incurred an income expense on the basis that the tenant has received an income amount. This is in contrast to the standard lease premium rules where the tenant pays the premium and is able to deduct an amount to the extent that it is treated as an income amount in the hands of the landlord (see 10.7.2).

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