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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Compensation: displaced tenants: statutory compensation

In any case in which it is claimed that compensation received on the loss of a tenancy is exempt from Capital Gains Tax because it is `statutory compensation’, or indeed is exempt on any other grounds, it is essential that the precise terms on which the tenancy was surrendered are established before accepting the claim. Further details are given in the instructions on business tenancies, see CG72328+, and agricultural tenancies, see CG72380+. The tenancy agreement itself should also be examined to determine whether it provides for compensation to be paid on termination; if so, the compensation will be chargeable to Capital Gains Tax.