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HMRC internal manual

Capital Gains Manual

Leases: grant of short lease out of freehold or long lease

Where a short lease, that is a lease with a term not exceeding 50 years, is granted out of a freehold or long lease, there are two particular rules which must be applied.



  • part of any premium paid will be chargeable as property income, see CG70900, and this part must be deducted in arriving at the consideration to be brought into the CGT computation.
  • in the A/A+B formula used for determining the allowable expenditure, the A in the numerator is not the same as the A in the denominator, see CG70961.