Income and Corporation Taxes Act 1988

Duration of leases U.K.

2 (1) Subject to sub-paragraph (2) and paragraph 3 below, section 38 has effect —

(a) as respects a lease granted after 12th June 1969; and

(b) so far as it relates to section 34(5), as respects a variation or waiver the contract for which is entered into after that date.

(2) So far as relates to relief under —

(a) section 385 [F1 or] 393 [F2 or 393A(1)]; or

(b) section 380(1) as applied by subsection (2) of that section; or

(c) section 25(1);

given by setting a loss against, or making a deduction from, income of —

(i) the year 1988-89 or any subsequent year of assessment, or

(ii) a company's accounting period ending after 5th April 1988,

section 38 shall be deemed to have had effect as from the passing of the Finance Act 1963[1963 c. 25.] , and as respects leases granted at any time.

(3) Notwithstanding section 31 or any other enactment governing the order in which reliefs are given, in applying sub-paragraph (2) above it shall be assumed that all relief which could not be affected by the operation of that sub-paragraph was given (for all years of assessment and accounting periods before or after the passing of this Act) before relief which could be affected by the operation of that sub-paragraph.

(4) All such adjustments shall be made, whether by way of assessment or discharge of repayment of tax, as are required to give effect to section 38 with this paragraph.

Textual Amendments

F1 Word "or" repealed by 1991 s. 123 and Sch. 19 Part V in relation to losses incurred in accounting periods ending on or after 1 April 1991.

F2 1991 s.73(3)-(5) and Sch. 15 para. 27(1) in relation to losses incurred in accounting periods ending on or after 1 April 1991 - deemed always to have had effect.

3 (1) Sections 24 and 38 shall have effect subject to the modifications set out in sub-paragraphs (2) to (4) below in relation to any lease granted after 12th June 1969 and before 25th August 1971 and, so far as section 38 relates to section 34(5), in relation to any variation or waiver the contract for which was entered into between those dates, except to the extent that section 38 affects the computation of the profits or gains or losses of a trade, profession or vocation or relates to relief under —

(a) section 25(1);

(b) section 385 [F3 or ]393 [F4 or 393A(1)];

(c) subsection (1) of section 380 as applied by subsection (2) of that section; or

(d) section 779(5).

(2) In section 24, in subsection (1), in the definition of “premium”, the words from “or to” to “landlord ”, and subsections (3) and (4) shall be omitted.

(3) In subsection (1) of section 38 the following paragraph shall be inserted before paragraph (a) —

“(aa) where the terms of the lease include provision for the determination of the lease by notice given by the landlord, the lease shall not be treated as granted for a term longer than one ending at the earliest date on which it could be determined by notice so given;”and sub-paragraph (ii) of paragraph (a) and paragraph (c) shall be omitted.

(4) In subsection (2) of that section for the words “Subsection (1)” there shall be substituted the words “ Subsection (1)(a) ”, and subsection (4) of that section shall be omitted.

Textual Amendments

F3 Word "or" repealed by 1991 s. 123 and Sch. 19 Part V in relation to losses incurred in accounting periods ending on or after 1 April 1991.

F4 1991 s. 73(3)-(5) and Sch. 15 para. 27(1) in relation to losses incurred in accounting periods ending on or after 1 April 1991 - deemed always to have had effect.

4 (1) Where section 38 does not have effect, the following provisions of this paragraph shall apply in ascertaining the duration of a lease for the purposes of sections 34 to 36.

(2) Subject to sub-paragraph (4) below, where the terms of the lease include provision for the determination of the lease by notice given either by the landlord or by the tenant, the lease shall not be treated as granted for a term longer than one ending at the earliest date on which it could be determined by notice.

(3) Subject to sub-paragraph (4) below, where any of the terms of the lease (whether relating to forfeiture or to any other matter) or any other circumstances render it unlikely that the lease will continue beyond a date falling before the expiration of the term of the lease, the lease shall not be treated as having been granted for a term longer than one ending on that date.

(4) Where the duration of a lease falls to be ascertained after the date on which the lease has for any reason come to an end, the duration shall be taken to have extended from its commencement to that date, and where the duration falls to be ascertained at a time when the lease is subsisting the preceding provisions of this paragraph shall be applied in accordance with circumstances prevailing at that time.

(5) In relation to Scotland, “term ” in this paragraph, where referring to the duration of a lease, means “period”.

(6) This paragraph shall be construed as one with Part II.