Capital Allowances Act 2001 section 365

Effect of creation of subordinate lease

Section 365 confirms that the relevant interest in a property is not affected when a subordinate lease or other lesser interest is created out of it.

• The relevant interest continues unchanged despite the creation of any subordinate lease or other interest carved out of it.
• A landlord who grants a lease to a tenant does not lose their status as holder of the relevant interest for capital allowances purposes.
• This ensures continuity of capital allowances entitlement even when the ownership structure of a property becomes layered through sub-lettings.
• The principle applies to any type of subordinate interest, not just formal leases.