UUÂãÁÄÖ±²¥

Surrender of lease

Where a sum is payable by a tenant under the terms of a short lease in consideration for the surrender of the lease, part of the sum is treated as a receipt of a property business of the recipient at the time the sum is payable. The part treated in this way is computed using a formula similar to that used for a premium¹. See B6.302.

For capital gains purposes, such a sum is deemed to be a premium received by the landlord (in addition to any other premium) received at the time the sum is payable². The deemed premium is treated as consideration for a separate transaction consisting of the disposal by the landlord of his interest in the lease³.

HMRC does not allow a deduction for any part of the cost in respect of the interest in the freehold or headlease from which the lease was granted⁴.

Where the tenant pays a sum in consideration for the surrender of a lease, and the