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HMRC internal manual

Capital Gains Manual

Leases: sum paid by tenant to procure surrender of lease

Where a tenant no longer wishes to retain a lease of particular premises, he or she may be prepared to make a payment, either to the landlord in order to effect a surrender of the lease, or to a third party to accept an assignment of the lease. Any such payment will not be allowable expenditure in computing the loss arising on the disposal of the lease. It does not ‘enhance’ the value of the asset, see TCGA92/S38 (1)(b), nor is it within any of the categories of incidental costs of disposal listed in TCGA92/S38 (2), see CG15250+.

This type of payment may be described as a ‘reverse premium’. However, it is not a reverse premium of the kind described in CG70830-CG70852.