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HMRC internal manual

Capital Gains Manual

Leases: part of premium chargeable as income: effect on CGT computation

TCGA92/SCH8/PARA5 & TCGA92/SCH8/PARA6

The amount of a premium paid for the grant of a short lease which is chargeable as income is excluded from the consideration taken into account for CGT purposes. The precise way in which this is done depends on whether:
 

  • The lease was granted out of a freehold or long lease, see CG70950-CG70962, or
  • The lease was granted out of a short lease, see CG71000-CG71015.

The precise rules are contained in TCGA92/SCH8/PARA5 and TCGA92/SCH8/PARA6. TCGA92/S37, the general provision regarding amounts chargeable to Income Tax, see CG14303+, is specifically over-ridden by TCGA92/SCH8/PARA5 (6).