How will I be taxed on nonrefundable, up front fees? 

I sell houses on a Rent-to-Own basis using option agreements. How will I be taxed on the non refundable, upfront option fee as I will not know if they are buying for the next threeyears? Also, what happens if they buy/don't buy as this money comes off the purchase price?

To answer your question, here is a quote from the Revenue Capital Gains Manual page CG12350: In consideration of a payment by A to B of £100, B grants to A an option to buy a chargeable asset from him within 3 months for £15,000. If B did not incur any allowable expenditure he has a chargeable gain of £100 from the disposal of the option. This is assessable for the year in which the option was granted. If A abandons the option there is no loss relief to him and B remains liable on a chargeable gain of £100. If A exercises the option his cost of acquisition is £15,000 + £100 = £15,100 and the same figure is used in calculating B's chargeable gain for the year in which the option is exercised. 

If B has already been assessed on the £100 gain from the disposal of the option itself that assessment should be discharged, or reduced if other gains are included in the assessment and if the tax has been paid it should be set off against the tax payable on the gain on the disposal of the asset.