Capital Allowances Act 2001 section 359

Provisions applying on termination of lease

Section 359 sets out how a lease is treated for capital allowances purposes when it comes to an end, covering situations where the tenant stays on, exercises a renewal option, or where payments change hands.

• Where the tenant remains in the building after the lease ends with the landlord's consent and no new lease is granted, the original lease is treated as continuing for as long as the tenant stays in possession.
• Where the tenant exercises an option under the original lease to take a new lease, the new lease is treated as a continuation of the original rather than a separate arrangement.
• Where the landlord makes a payment to the tenant in respect of the building on termination, the lease is treated as having ended by surrender in exchange for that payment.
• Where a new lease is granted to a different tenant who pays a sum to the outgoing tenant, the two leases are treated as one continuous lease that has been assigned from the old tenant to the new tenant in exchange for that payment.