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HMRC internal manual

Capital Gains Manual

Compensation: displaced tenants: statutory compensation

The taxpayer may also contend that the compensation is exempt because there was no legal right to compensation, either under the terms of the tenancy agreement or under any other statutory provision. Such compensation is often referred to as `ex gratia’. It is often paid to displaced tenants of licensed premises, see CG72450+, but again the precise terms on which the tenancy was surrendered, and the terms of the tenancy agreement, need to be established before accepting that such compensation is exempt from Capital Gains Tax.