I own a buy-to-let property and I have 85 years remaining on the lease. I understand that the cost of extending a lease (i.e. valuation, lawyers etc.) is tax deductible. However, I have also been informed that if a lease is extended for less than the statutory right, that cost of the lease is also tax deductible. Can you confirm this please?

Arthur Weller replies:
If you look at HMRC’s Property Income manual (www.gov.uk/hmrc-internal-manuals/property-income-manual/pim2205), you can see that you are correct, the costs of extending a lease are tax deductible; but only where the lease is for less than 50 years is it allowable against rental income, for the annual income tax computation. Otherwise, it is only allowable against the capital gain when the property is eventually sold, for the capital gains tax computation.