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HMRC internal manual

Capital Gains Manual

Leases: granting of a lease: transactions not at arm's length or between connected persons: imputed premiums

TCGA92/S17 & S18

Where a lease is granted between connected persons (TCGA92/S18), see CG14560 onwards, or is otherwise granted not at arm’s length, see CG14540 onwards, 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 onwards, and you should obtain the Valuation Office Agency’s opinion of the value of the deemed premium, see CG74000P.

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