Is a lease surrender payment tax deductible?
Q. My business needs to move to smaller cheaper premises, but my current landlord wants me to pay a fee to surrender the property lease earlier than the next break point. Can I claim that lease-surrender payment as a business expense?
A. Unfortunately you can’t get a tax deduction for this payment to your landlord, as a fee to release you from the continuing obligation to make payments under the lease is regarded as a capital payment. There is also no tax relief for this payment under the capital gains tax rules as it doesn’t represent a cost of purchase or a cost of disposal of an asset. So for you it’s a ‘tax nothing’.
