Capital Allowances Act 2001 section 291

Supplementary provisions with respect to elections

Section 291 sets out the conditions, restrictions and procedural requirements that apply when a lessor and lessee wish to elect under section 290 to treat the grant of a long lease (exceeding 50 years) as if it were a sale of the relevant interest for industrial buildings allowance purposes.

• Connected persons may only make the election if the lessor is a statutory body and the lessee is a company it controls
• No election is permitted if the lessor's sole or main expected benefit from granting the lease and making the election is to obtain a balancing allowance
• Whether a lease exceeds 50 years is determined under the Corporation Tax Act 2009 rules, ignoring any provision that treats a new lease granted on exercise of an option as a continuation of the old lease
• The election must be notified to HMRC within two years of the lease taking effect, and all necessary tax adjustments must be made to give it effect