Section 859 — Corporation Tax Act 2010: Lease varied to provide for increased rent

Lease varied to provide for increased rent 859 1 This section applies if each of conditions A to D is met.

2 Condition A is that—

a a company (“ the lessee ”) is a lessee of land under a lease which has 50 years or less to run (“the original lease”),

and b the lessee is entitled in respect of the rent under the original lease to a deduction by way of relevant corporation tax relief.

3 Condition B is that (by agreement with the landlord) the lessee varies the original lease.

4 Condition C is that under the variation—

a the lessee agrees to pay a rent greater than that payable under the original lease, and b the lessee agrees to pay the greater rent in return for a consideration which would not (apart from this Chapter) be taxable except as capital in the lessee's hands.

5 Condition D is that under the variation the period during which the greater rent is to be paid ends 15 years or less after the date on which—

a the consideration is paid to the lessee, or b the last instalment of the consideration is paid to the lessee (if it is paid in instalments).

6 If this section applies the lessee must be treated for the purposes of this Chapter—

a as having surrendered the original lease for the consideration mentioned in subsection (4)(b),

and b as having been granted a new lease for a term of 15 years or less but otherwise on the terms of the original lease varied as mentioned in subsection (3).