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HMRC internal manual

Capital Gains Manual

Compensation displaced tenants: business tenancies

The tenant may still be entitled to statutory compensation if the conditions in either CG72361 or CG72362 are met, and if so that part of any surrender payment made by the landlord is not chargeable to Capital Gains Tax. The balance of the surrender payment relates to the surrender of the fag end of the tenancy, which is a disposal, and is therefore within the scope of Capital Gains Tax.

If the tenant is not entitled to statutory compensation the whole of any surrender payment by the landlord is chargeable.