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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Assets held on 6/4/65: asset derived from another asset

TCGA92/SCH2/PARA16 (9)Where one asset is derived from another asset in circumstances in which CG15230+ would apply, the time-apportionment formula should be applied by reference to the period of ownership of both assets. Thus, where the freehold or superior lease was acquired by a tenant or lessee, his period of ownership should be taken as running from the commencement of his tenancy or original lease, see CG71400+ and CG71421. Where a landlord pays a capital sum to obtain the surrender of a lease or tenancy, however, the time- apportionment computation should be made in accordance with CG15573, see also CG71262+. The above instruction

  • applies whether or not there was any relevant expenditure on the original asset
  • does not apply to a new lease granted after the expiry of the old lease (Bayley v Rogers 53TC420).See also CG15230+.