Capital Allowances Act 2001 section 497

Effect of creation of subordinate interest

Section 497 confirms that the relevant interest in a building or structure is not affected when a subordinate interest, such as a lease, is created out of it.

• The relevant interest is the interest in a property that determines who is entitled to claim capital allowances on qualifying expenditure.
• Creating a lease or other subordinate interest out of the relevant interest does not cause it to lose its status as the relevant interest.
• This means a freeholder who grants a lease still holds the relevant interest, even though a new lesser interest now exists beneath it.
• The rule ensures continuity in the capital allowances regime so that routine property transactions do not inadvertently disrupt entitlement to allowances.