Taxes Consolidation Act 1997 section 281

Special provisions in regard to leases

Section 281 sets out special rules for the treatment of leases of industrial buildings or structures when those leases come to an end, covering situations where the tenant remains in possession, obtains a new lease, or receives compensation from the landlord.

• Where a tenant remains in possession of an industrial building after a lease ends, with the landlord's consent but without a new lease, the original lease is treated as continuing for capital allowances purposes.
• Where a tenant is granted a new lease on foot of a statutory entitlement or an option in the original lease, the new lease is treated as a continuation of the original lease, so no balancing adjustment arises.
• Where a landlord pays compensation to the tenant on the ending of a lease in respect of a building or structure, the lease is treated as having been surrendered in return for that payment.
• These rules ensure that writing-down allowances are preserved where the tenant's occupation effectively continues, and that compensation payments are properly brought into the balancing allowance or charge calculation.