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Capital Allowances Act 2001

Section 367: Merger of leasehold interest

1260.This section is based on sections 125(4) and 126(4) of CAA 1990. It deals with a relevant interest which is a lease. It sets out rules to determine what happens to the relevant interest when the lease comes to an end.

1261.Subsection (1) provides that the reversionary interest (for example the freehold in a simple case) becomes the relevant interest if:

  • a lease is extinguished on surrender to the holder of the reversionary interest; or

  • the holder of the lease acquires the reversionary interest.

1262.Subsection (2) provides an additional rule if a different person owns the relevant interest as a result of subsection (1). The new owner is treated as having acquired the relevant interest. This gives the new owner the right allowances.

1263.Subsection (3) excludes from this section the cases dealt with in section 368.

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