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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Leases: granting of: transactions not at arm's length: imputed premiums


Where a lease is granted between connected persons, see CG14560+, or is otherwise granted not at arm’s length, the tenant is deemed to have acquired the lease at its market value and paid the appropriate premium.

The provisions of TCGA92/S17 will apply, see CG14530+, and you should obtain the Valuation Office Agency’s opinion of the value of the deemed premium, see CG74000+.

A premium which is deemed to arise in these circumstances is to be treated for CGT purposes in precisely the same way as any other premium.