I bought a 100 year lease on a retail unit in 1988 for £20,000 and spent about £40,000 converting it into a property I could trade from. I sold the lease in March 2008 for £125,000 when it had 80 years to run. Can I get a deduction for the £40,000 I spent on making the property useable?
You had a right to use the property absolutely for 100 years under the lease and spent £40,000 improving that property. This expenditure also made the property more attractive to the person who has purchased the lease from you, and certainly enhanced the amount the purchaser was prepared to pay to acquire the lease. The improvement costs are thus fully deductible from the sales proceeds of £125,000. If the Tax Inspector refuses to allow you this deduction, point him to the example in his own Capital Gains Manual at para CG 71148.