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HMRC internal manual

Capital Allowances Manual

FCA: Termination of a lease


If the lessee of a flat remains in possession of the flat with the lessor’s consentwithout a new lease being granted when a lease terminates, the lease is treated ascontinuing while the lessee remains in possession.

If a new lease is granted to the lessee when a lease terminates as a result of the lesseeexercising an option available under the first lease, the new lease is treated as acontinuation of the first lease.

If the lessor pays the lessee a sum in consideration of a flat comprised in the lease whenthe lease terminates, treat the lease as if it had ended by being surrendered for thepayment.

If on the termination of a lease, another lease is granted to a different person who paysthe first lessee a sum in consideration in connection with the transaction, the two leasesare treated as if they were the same lease, assigned to the second in consideration of thepayment.