Capital Allowances Act 2001 section 368

Provisions applying on ending of lease

Section 368 deals with what happens to the relevant interest for agricultural buildings allowance purposes when a lease that constitutes that relevant interest comes to an end, other than by merging with a superior interest.

• If the same lessee is granted a new lease of all or part of the related agricultural land, they are treated as continuing to hold the same relevant interest in the whole of that land
• If a different lessee is granted a new lease and makes a payment to the outgoing lessee for assets representing the qualifying expenditure, the incoming lessee is treated as acquiring the relevant interest in the whole of the related agricultural land
• In all other cases, the former lease and the lessor's interest under it are treated as the same interest, so the lessor is treated as having acquired the relevant interest
• These provisions cover new leases of part of the land as well as new leases of the whole, ensuring continuity of the relevant interest for allowance purposes