Leases merger


Where a leaseholder of land acquires a superior interest (either the freehold reversion or the immediately superior leasehold interest) in the same land, the earlier lease will be extinguished. The two separate assets, that is the original lease and the superior interest, are regarded as merged within TCGA92/S43 and the owner now has a single asset.

Allowable expenditure

On any disposal of this single asset, the allowable expenditure will be the sum of the consideration given for:

the acquisition of the earlier lease, but see below, and

the acquisition of the superior interest (the freehold reversion or the superior leasehold interest).

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