Corporation Tax Act 2010 section 850

New lease after assignment or surrender

Section 850 sets out the five conditions that must all be met for the sale and leaseback rules in this chapter to apply where a company assigns or surrenders an existing lease and obtains a new lease over the same land.

• The company must hold an original lease with 50 years or less remaining and be entitled to corporation tax relief on the rent paid under that lease.
• The company must assign the original lease to another party or surrender it to its landlord, and the proceeds would not otherwise be taxable except as a capital receipt.
• A new lease of 15 years or less must be granted or assigned to the company or a linked person, covering all or part of the same land as the original lease.
• Neither the company nor a linked person may have had a legally or equitably enforceable right to the new lease before 22 June 1971; if conditions A to D are met but this historical condition is not, separate transitional provisions apply.