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HMRC internal manual

Business Leasing Manual

’Income-into-capital’ schemes and back loaded leases: Relief for set-offs against rentals: part disposal of asset

TCGA92/S37A(6)-(9) provides that on a part disposal only a proportion of cumulative accountancy rental excess is to be deducted. That proportion is to be arrived at by multiplying that excess by the usual CG part disposal formula (‘ A ÷ (A + B)’ - see CG12730 onwards). Thus if the unused excess is £1000, the part disposal proceeds are £10,000 and the market value of the part retained is £15,000 the excess which may be deducted is £1000 x £10,000 ÷ (£10,000 + £15000) = £400.