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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Leases: capital sum received for alteration of terms: introduction

TCGA92/SCH8/PARA3

A landlord may receive a capital sum from a tenant in return for the variation of one or more of the terms of a lease or for the commutation of the rent due under the lease. The way in which the gain accruing to the landlord is calculated depends principally on three factors:

i) whether the payment was made in commutation of the rent due under the lease, TCGA92/SCH8/PARA3 (2), or whether it was made for the variation or waiver of one or more of the terms of the lease, TCGA92/SCH8/PARA3 (3); and

ii) if the payment was made in commutation of the rent due, whether the terms of the lease provided for such a commutation payment; and

iii) whether the payment was made on or after 6April1996.