Capital Allowances Act 2001 section 499

Provisions applying on termination of lease

Section 499 sets out how a lease that constitutes the relevant interest in a building is treated for capital allowances purposes when it terminates, ensuring continuity or triggering appropriate balancing adjustments depending on the circumstances.

• Where a lessee remains in possession after a lease ends with the lessor's consent and no new lease is granted, the original lease is treated as continuing for as long as the lessee stays in occupation.
• Where a new lease is granted to the same lessee through the exercise of an option contained in the original lease, the new lease is treated as a continuation of the original lease rather than a separate arrangement.
• Where the lessor makes a payment to the lessee in respect of a building when the lease terminates, the lease is treated as having ended by surrender in consideration of that payment, which can trigger a balancing adjustment.
• Where a new lease is granted to a different lessee on termination and that new lessee makes a payment to the former lessee, the two leases are treated as the same lease assigned from the old lessee to the new one in consideration of the payment.