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Grant of lease from wasting interest |
See Also
Assignment of short lease | Chargeable gains summary | Grant of lease from non wasting interest
Select from the following headings:
Background | Developing the schedule | Completing the Schedule | Standard Sub-Schedules | Carry Forward | Related Errors
Where a sub lease is granted from a head lease which is a wasting asset because it has fewer than 50 years to run, the head lease is treated as a wasting asset and reduced by the table of percentages so that more depreciation is deducted from the cost of the lease as it expires (TCGA 1992 Sch 8 para 1(1)). In addition part of the premium paid for the sub lease is assessable as Property income under (TCGA 1992 Sch 8 para 5(1)).
The schedule deals with acquisitions after 6 April 1965, which may be either pre or post March 1982.
The schedule is developed from the E schedule.
Description
A description of the asset should be entered in the cell provided below the schedule title. This will then appear on the Chargeable gains summary schedule.
Date
Enter the dates for the acquisition of the head lease and the grant of the sub lease.
Premium
Enter the amount paid on the acquisition of the head lease and the grant of the sub lease.
Duration and expiry date
For files prior to FY2004, you should enter the duration of both the head and sub leases in the cells provided. The software will use this information to derive the expiry date of each lease.
For files in FY2004 and onwards, you should enter the expiry date of each lease in the cells provided. The software will use this information to derive the duration (in complete years) of each lease.
Capital/Property income calculations
The system calculates the amounts assessable as Property income and chargeable gains tax on the grant of the sub lease. It will also separately compute the Property income arising on the acquisition of the head lease, which it restricts by a proportion of the sub lease duration over the duration of the head lease. This amount then reduces/increases the amount assessable as Property income and chargeable gains tax computed in the first part of the calculation respectively.
The capital element will then form the Net proceeds for the Original cost part of the calculation of the capital gain or loss.
Acquisition cost/31 March 1982 market value
The software will return the acquisition cost entered in the Premium field in the top part of the screen. Where appropriate the user should enter the 31 March 1982 market value in the adjacent cell. The software will then derive the disallowable amount of the original cost and market value to be deducted from the sales proceeds, and use these to compute the relevant indexation allowance on the higher of allowable cost or market value.
Foreign tax paid
Where this data entry cell is completed, this will enable a Deduct foreign tax selector flag at the foot of the schedule, set by default to 'No', which may be changed in order to treat the foreign tax as a deduction. This can then be used to reduce the gain (TCGA 1992 s 278) or increase the base cost if the gain is rolled over.
A further data entry cell, Foreign tax eligible for credit, will also be enabled.
This schedule has no standard supporting schedules.
This schedule does not carry forward.
Error | How to
solve it |
| Not in period! | The date the asset was transferred must be before the end of the accounting period. For FY 2005 files and onwards where the asset was disposed of before the start of the accounting period it is possible to override the error where s.179 TCGA applies by means of a selector on the schedule. |
© 2009 Thomson Reuters.