Capital Allowances Act 2001 section 288

Effect of creation of subordinate interest

Section 288 confirms that the relevant interest in a property is not affected simply because a subordinate interest, such as a lease, is carved out of it.

• The relevant interest in a building or structure remains unchanged even when a lease or other subordinate interest is created out of it.
• Creating a lease does not cause the original interest to lose its status as the relevant interest for capital allowances purposes.
• This preserves the entitlement to capital allowances for the holder of the relevant interest, regardless of any subordinate interests granted.
• An exception applies where the parties elect under section 290 to treat the grant of a long lease (exceeding 50 years) as if it were a sale of the relevant interest.