Section 194 — Inheritance Tax Act 1984: Leases.

Leases. 194 1 Where the claim relates to an interest which is the interest of a lessee under a lease the duration of which at the date of the death does not exceed fifty years, an addition shall be made to the sale price of the interest; and the amount of the addition shall be equal to the appropriate fraction of the value on death of the interest.

2 In subsection (1) above, “ the appropriate fraction ” means the fraction— P ( 1 ) - P ( 2 ) P ( 1 ) where— P(1) is the percentage that would be derived from the Table in paragraph 1 of Schedule 8 to the 1992 Act for the duration of the lease at the date of the death, and P(2) is the percentage that would be so derived for the duration of the lease at the date of the sale.