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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Short leases: assignment of short lease granted at under value

ITTOIA 2005/S282 and CTA 2009/S222


ITTOIA 2005/S282 is an anti-avoidance provision which imposes a charge to Income Tax on an unincorporated UK property business in certain circumstances when a short lease is assigned, having been granted for less than its market value. CTA 2009/S222 is an equivalent provision relating to incorporated UK property businesses. (See PIM1202 to PIM1209).

Although TCGA92/S37 generally excludes from the computation for CGT purposes any amounts which have been charged to Income Tax, this does not apply to any amounts charged under ITTOIA 2005/S282 or CTA 2009/S222. TCGA92/SCH8/PARA6 (2) specifically disapplies Section 37 in these circumstances. Hence the full amount of the consideration will be taken into account for CGT purposes.