Leases: granting of a lease: premiums
A premium is a capital sum paid to the landlord on the granting of a lease. A premium will normally be met where the rent payable under the lease is less than a full market rent. It will usually take the form of a cash payment but it could be in the form of money’s worth, for example the tenant may agree to undertake certain work on the landlord’s behalf and for the landlord’s benefit, see also CG71040 for capital improvements made by the tenant.
In Scotland, a premium is usually called a grassum.
TCGA92/Sch 8/Para 10 (2) & (3)
The full definition of the term ‘premium’ for Capital Gains Tax purposes is contained in TCGA92/Sch 8/Para 10 (2) and (3), and includes any like sum, whether payable to the intermediate or a superior landlord.
Any sum (other than rent) paid on or in connection with the granting of a tenancy is presumed to have been paid by way of premium except where it can be shown that other sufficient consideration for the payment has been given.