Capital Allowances Act 2001 section 326

Interpretation of section 325

Section 326 defines the key terms used in section 325, which restricts balancing allowances where a building is sold subject to a subordinate interest such as a lease or other right over the property.

• A "commercial rent" is the rent that would reasonably be expected if the transaction were conducted at arm's length, taking into account any premium paid for the grant of the interest.
• A "premium" means any capital payment made in connection with the grant of an interest, but excludes any part of that payment already taxed as a property business receipt under the lease premium rules in corporation tax or income tax legislation.
• A "subordinate interest" is any interest in or right over the building, whether granted by the former owner or by someone else — for example, a lease or a licence.
• "Rent" is defined broadly to include any consideration that is not capital in nature, while "capital consideration" covers sums that are capital amounts or would be capital if paid in money.