Leases: part of premium chargeable as income: deemed premium: example
Mr K granted a 30 year lease of his holiday cottage to his brother. The rent payable under the lease was less than a full market rent. Mr K received a premium of £10,000. The Valuation Office Agency considered that the premium which would have been paid if the lease had been granted at arms length was £25,000.
The amount chargeable as income, see CG70900, is:
|£10,000||-||(£10,000 x 29)||=||£10,000 - £5,800||=||£4,200|
The consideration to be taken into account for CGT purposes is:
£5,800 + £15,000 = £20,800