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HMRC internal manual

Capital Gains Manual

Leases: granting of a lease: no premium paid on grant of lease

If no premium is paid on the grant of a lease, and provided that the grant of the lease was an arm’s length transaction, no chargeable gain will accrue.

However, if the landlord has incurred any expenditure allowable under TCGA92/S38 (1)(c) (incidental costs of disposal), see CG15250, in granting the lease, a capital loss equal to the amount of that expenditure will accrue.