IHTM14670 - Fall in value relief: leases
You may need to make an adjustment to the market values (IHTM14626) where the transferred property is
- a leasehold interest,
- having not more than fifty years to run at the time of the chargeable transfer.
Make an adjustment to the market value of the property transferred at the date of death or sale.
Increase the value at the relevant date by the formula:
P(1) - P(2) ÷ P(1) × mv
- mv is the market value at the time of the chargeable transfer.
- P(1) and P(2) are the percentages derived from the table below (which comes from Para 1 Sched 8 TCGA 1992) by reference to
- the length of the lease at the time of the chargeable transfer - P(1), and
- the length of the lease at the date of death or sale - P(2).
|
Years |
Percentage |
|
Years |
Percentage |
|
50 or more |
100.000 |
|
25 |
81.100 |
|
49 |
99.657 |
|
24 |
79.622 |
|
48 |
99.289 |
|
23 |
78.055 |
|
47 |
98.902 |
|
22 |
76.399 |
|
46 |
98.490 |
|
21 |
74.635 |
|
45 |
98.059 |
|
20 |
72.770 |
|
44 |
97.595 |
|
19 |
70.791 |
|
43 |
97.107 |
|
18 |
68.697 |
|
42 |
96.593 |
|
17 |
66.470 |
|
41 |
96.041 |
|
16 |
64.116 |
|
40 |
95.457 |
|
15 |
61.617 |
|
39 |
94.842 |
|
14 |
58.971 |
|
38 |
94.189 |
|
13 |
56.167 |
|
37 |
93.497 |
|
12 |
53.191 |
|
36 |
92.761 |
|
11 |
50.038 |
|
35 |
91.981 |
|
10 |
46.695 |
|
34 |
91.156 |
|
9 |
43.154 |
|
33 |
90.280 |
|
8 |
39.399 |
|
32 |
89.354 |
|
7 |
35.414 |
|
31 |
88.371 |
|
6 |
31.195 |
|
30 |
87.330 |
|
5 |
26.722 |
|
29 |
86.226 |
|
4 |
21.983 |
|
28 |
85.053 |
|
3 |
16.959 |
|
27 |
83.816 |
|
2 |
11.629 |
|
26 |
82.496 |
|
1 |
5.983 |
|
|
|
|
0 |
0.00 |
If the duration of the lease is not an exact number of years, use the percentage for the whole number of years plus one twelfth of the difference between that and the percentage for the next highest number of years for each odd month, counting an odd 14 days or more as one month.
Example
A lease having exactly four years to run is transferred on 31 December 1986 when worth £20,000. The transferor dies on 31 December 1988, when the lease is worth £5,000. Under the table, P(1) is 21.983 and P(2) is 11.629.
For relief purposes, increase the £5,000 by
(21.983 - 11.629) ÷ 21.983 × £22,000 = £9,420
to £14,420.
Note
Also consider whether the lease, being an interest in land, is subject to amendments for any changes (IHTM14661) that have occurred during the relevant period.
