Deductions for expenditure on sea wallsU.K.
254Deduction for expenditure on sea wallsU.K.
(1)This section applies if in a tax year a person —
(a)is the owner or tenant of any premises, and
(b)incurs expenditure in making a sea wall or other embankment necessary for the preservation or protection of the premises against the encroachment or overflowing of the sea or any tidal river.
(2)In calculating the profits of any property business (within the charge to tax under Chapter 3) carried on by the person in relation to the premises, a deduction is allowed for the expenditure in each tax year comprised in the deduction period.
(3)The deduction period comprises—
(a)the tax year in which the expenditure is incurred, and
(b)the next 20 tax years.
(4)The amount of the deduction is 1/21 of the expenditure.
(5)The deduction is apportioned between the accounting period or periods comprised in the tax year, but—
(a)no apportionment is made to an accounting period which ends before the expenditure is incurred, and
(b)if the person is entitled to the deduction because of a transfer dealt with by section 255, no apportionment is made to an accounting period which ends before the transfer takes place.
(6)In the case of the transfer of an interest in the premises dealt with by section 255, this section applies as if the reference to the person in subsection (2) above included the transferor and the transferee.
(7)No deduction is allowed for any expenditure in respect of which a capital allowance has been made.
255Transfer of interest in premisesU.K.
(1)This section applies if, during the deduction period, the whole of the person's interest in the premises or in any part of them is transferred, whether by operation of law or otherwise.
(2)For the tax year in which the transfer takes place—
(a)the transferor and the transferee are entitled to a part of any deduction under section 254, and
(b)the amount of the deduction is determined by what is just and reasonable.
(3)For subsequent tax years in the deduction period, the entitlement to any deduction under section 254 depends on whether the interest transferred is in the whole of the premises or in part of them.
(4)If the interest transferred is in the whole of the premises, the transferee (but not the transferor) is entitled to any deduction under section 254.
(5)If the interest transferred is in part of the premises—
(a)the transferor and the transferee are entitled to a part of any deduction under section 254, and
(b)the amount of the deduction is determined by reference to what is properly referable to the part of the premises.
(6)This section is supplemented by sections 256 (ending of lease of premises) and 257 (transfer involving person within the charge to income tax).
256Ending of lease of premisesU.K.
(1)If a person's interest in the premises is a lease that comes to an end before the end of the deduction period, the interest is treated as if transferred to the following persons.
(2)If a new lease of the premises is granted and the new tenant makes a payment in respect of the embankment in question to the old tenant, the transferee is the new tenant.
(3)Otherwise the transferee is the owner of the interest in immediate reversion on the lease (or, in Scotland, the landlord).
257Transfer involving person within the charge to income taxU.K.
(1)This section explains how section 255 works if—
(a)the transferor is a company within the charge to corporation tax and the transferee is a person within the charge to income tax, or
(b)the transferor is a person within the charge to income tax and the transferee is a company within the charge to corporation tax.
(2)Section 255 applies only for the purpose of determining—
(a)whether the company within the charge to corporation tax is entitled to a deduction (or part of a deduction) under section 254, and
(b)the amount of any such deduction.
(3)Accordingly, any reference to—
(a)whether a person is entitled to a deduction (or part of a deduction) under section 254, or
(b)the amount of any such deduction,
is ignored if the person is within the charge to income tax.
(4)For any entitlement of a person within the charge to income tax to a deduction for any of the expenditure, see sections 316 to 318 of ITTOIA 2005 (corresponding income tax provisions).