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Finance Act 1965

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Leases of land as wasting assets: curved line restriction of allowable expenditure

1(1)A lease of land shall not be a wasting asset until the time when its duration does not exceed fifty years.

(2)If at the beginning of the period of ownership of a lease of land it is subject to a sub-lease not at a rackrent and the value of the lease at the end of the duration of the sub-lease, estimated as at the beginning of the period of ownership, exceeds the expenditure allowable under paragraph 4(1)(a) of Schedule 6 to this Act in computing the gain accruing on a disposal of the lease, the lease shall not be a wasting asset until the end of the duration of the sub-lease.

(3)In the case of a wasting asset which is a lease of land the rate at which expenditure is assumed to be written off shall, instead of being a uniform rate as provided by paragraph 10 of Schedule 6 to this Act, be a rate fixed in accordance with the Table below.

(4)Accordingly, for the purposes of the computation under the said Schedule 6 of the gain accruing on a disposal of a lease, and given that—

(a)the percentage derived from the Table for the duration of the lease at the beginning of the period of ownership is P(1),

(b)the percentage so derived for the duration of the lease at the time when any item of expenditure attributable to the lease under paragraph 4(1)(b) of Schedule 6 to this Act is first reflected in the nature of the lease is P(2), and

(c)the percentage so derived for the duration of the lease at the time of the disposal is P(3),

then—

(i)there shall be excluded from the expenditure attributable to the lease under the said paragraph 4(1)(a) a fraction equal to

and

(ii)there shall be excluded from any item of expenditure attributable to the lease under the said paragraph 4(1)(b) a fraction equal to

.

(5)This, paragraph applies notwithstanding that the period of ownership of the lease is a period exceeding fifty years and, accordingly, no expenditure shall be written off under this paragraph in respect of any period earlier than the time when the lease becomes a wasting asset.

(6)Paragraph 11 of Schedule 6 to this Act shall apply in relation to this paragraph as it applies in relation to paragraph 10 of that Schedule. Table

YearsPercentageYearsPercentage
50 (or more)1002581.100
4999.6572479.622
4899.2892378.055
4798.9022276.399
4698.4902174.635
4598.0592072.770
4497.5951970.791
4397.1071868.697
4296.5931766.470
4196.0411664.116
4095.4571561.617
3994.8421458.971
3894.1891356.167
3793.4971253.191
3692.7611150.038
3591.9811046.695
3491.156943.154
3390.280839.399
3289.354735.414
3188.371631.195
3087.330526.722
2986.226421.983
2885.053316.959
2783.816211.629
2682.49615.983
00

If the duration of the lease is not an exact number of years the percentage to be derived from the Table above shall be the percentage for the whole number of years plus one twelfth of the difference between that and the percentage for the next higher number of years for each odd month counting an odd 14 days or more as one month.

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