Beta This part of GOV.UK is being rebuilt – find out what beta means

HMRC internal manual

Capital Gains Manual

Leases: granting of a lease: introduction

This section deals with the Capital Gains Tax consequences of the granting of a lease. As explained in CG70770, the granting of a lease is the part-disposal of the freehold or leasehold interest held by the grantor.

A chargeable gain or allowable loss will arise on the grant of a lease. There are three basic situations which are commonly met:

  • where a premium is paid;
  • where no premium is paid because the rent charged under the lease is a rack rent, see CG70751;
  • where the lease is granted otherwise than at arms length.

Each of these situations is covered in the guidance in this section.