Capital Allowances Act 2001 section 270DE

Merger of leasehold interest

Section 270DE deals with what happens to the relevant interest for structures and buildings allowance purposes when a leaseholder acquires the superior interest and the lease merges into that superior interest.

• This section applies where the relevant interest in a building or structure is a leasehold interest
• If the leaseholder acquires the reversionary interest (i.e. the interest immediately above the lease, such as the freehold or a superior lease), the leasehold interest is extinguished by merger
• When this happens, the superior interest into which the lease merges automatically becomes the new relevant interest for structures and buildings allowance purposes
• This ensures continuity of allowances so that the entitlement to claim structures and buildings allowances is not lost simply because the lease ceases to exist