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HMRC internal manual

Capital Gains Manual

Leases: grant of a lease: part disposal

The grant of a lease is a part disposal for CGT purposes. This is because the lessor hasretained a part of his original interest in the land in question.

  • If the lease is granted out of a freehold or long lease, the A/A+B formula in TCGA92/S42, see CG12730+, applies. However, if the lease which is granted is a short lease, that is a lease with a term of less than 50 years, a special rule applies regarding the A/A+B formula, see CG70961.
  • If the lease is granted out of a short lease, the A/A+B formula does not apply. TCGA92/SCH8/PARA4 contains special rules to deal with such cases, see CG71000+.