SCHEDULES

SCHEDULE 8Leases

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 50 years.

2

If at the beginning of the period of ownership of a lease of land it is subject to a sublease not at a rackrent and the value of the lease at the end of the duration of the sublease, estimated as at the beginning of the period of ownership, exceeds the expenditure allowable under section 38(1)(a) 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 sublease.

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 section 46, be a rate fixed in accordance with the Table below.

4

Accordingly, for the purposes of the computation 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 section 38(1)(b) 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 section 38(1)(a) a fraction equal to—

P(1)−P(3)P(1)math

, and

ii

there shall be excluded from any item of expenditure attributable to the lease under section 38(1)(b) a fraction equal to—

P(2)−P(3)P(2)math

.

5

This paragraph applies notwithstanding that the period of ownership of the lease is a period exceeding 50 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

Section 47 shall apply in relation to this paragraph as it applies in relation to section 46.

Table

50 (or more)

100

49

99.657

48

99.289

47

98.902

46

98.490

45

98.059

44

97.595

43

97.107

42

96.593

41

96.041

40

95.457

39

94.842

38

94.189

37

93.497

36

92.761

35

91.981

34

91.156

33

90.280

32

89.354

31

88.371

30

87.330

29

86.226

28

85.053

27

83.816

26

82.496

25

81.100

24

79.622

23

78.055

22

76.399

21

74.635

20

72.770

19

70.791

18

68.697

17

66.470

16

64.116

15

61.617

14

58.971

13

56.167

12

53.191

11

50.038

10

46.695

9

43.154

8

39.399

7

35.414

6

31.195

5

26.722

4

21.983

3

16.959

2

11.629

1

5.983

0

0

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.