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HMRC internal manual

Capital Gains Manual

Leases: introduction: duration of a lease: special rules

TCGA92/Sch 8/Para 8

Paragraph 8 of Schedule 8 of Taxation of Chargeable Gains Act 1992 contains special rules which determine the duration of a lease in particular cases. Those rules are explained in Paragraph 8 (2) - (5) as set out below.

TCGA92/Sch 8/Para 8 (2)

The terms of the lease may allow the landlord to bring it to an end at some time before the end of its stated term. Such a lease should be treated as having been granted for a term ending on the earliest date that it could be terminated by the landlord (unless the rule in Para 8 (3) & (4) provides that it should be treated as having been granted for a shorter term).

TCGA92/Sch 8/Para 8 (3) & (4)

The terms of the lease may make it unlikely that it will continue beyond a particular date. Such a lease should be treated as having been granted for a term ending on that date (unless the rule in Para 8 (2) provides that it should be treated as having been granted for a shorter term).

An example of the rule in Para 8 (3) & (4) would be where at a particular date the rent was due to rise to a level which was likely to greatly exceed the normal commercial rent for that property.

TCGA92/Sch 8/Para 8 (5)

The provisions of the lease may allow the tenant to extend it beyond its stated term. Such a lease should be treated as having been granted for the extended term (unless either of the rules in Para 8 (2) or Para 8 (3) & (4) provides that it should be treated as having been granted for a shorter term).

TCGA92/Sch 8/Para 8 (6)

When the duration of a lease needs to be determined, it must be determined by reference to the facts which were known at the date on which it was granted.