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HMRC internal manual

Capital Gains Manual

Leases: grant of lease out of short lease: allowable expenditure


Where a short lease, that is a lease for a term of not more than 50 years, is granted out of a short lease, TCGA92/SCH8/PARA4 (1) over-rides the normal part disposal rules in TCGA92/S42.

A short lease is a wasting asset, see CG70752, and therefore the allowable expenditure attributable to it reduces over its term. The expenditure which is allowable when a short lease is granted out of a short lease is the proportion of the allowable expenditure which will waste away over the duration of the sub-lease. This is illustrated by the example in CG71003 below.