»Ê¹ÚÌåÓýapp

A lease is an interest in land (or a real right in Scotland).

»Ê¹ÚÌåÓýapp grant of a lease out of a freehold interest or out of leasehold interest is a part disposal of an interest in land so there are consequences for tax purposes. Equally the disposal of a lease, alteration of its terms or mergers can also have capital gains consequences. A short lease, one with less than 50 years to run, is a wasting asset for capital gains tax purposes, so special rules apply where these are concerned.

This guidance sets out detail on the nature of a lease and the appropriate treatment in various circumstances.

Layout of the Guidance

»Ê¹ÚÌåÓýapp Introductory section at CG70700P sets out the definition of a lease, looks at certain different types of leases and introduces the concept of a short lease. It also introduces the granting of a lease and consider sale and leaseback arrangements.

»Ê¹ÚÌåÓýapp Granting of a Lease section at CG70800P looks at the circumstances where a long lease or short lease is granted, the implications of any premium or reverse premium that is paid, and looks at the interaction with property income. »Ê¹ÚÌåÓýapp specific guidance on Premiums as Property Income is at CG70900P. »Ê¹ÚÌåÓýapp grant of leases (long and short) out of freeholds or long leases is at CG70950P, the grant of a short lease out of a short lease is at CG71000P.

»Ê¹ÚÌåÓýapp Disposal of a Lease section at CG71100P looks at the circumstances where a lease is disposed of; again there are different rules for disposing of a short or long lease and these are set out. »Ê¹ÚÌåÓýapp issues of payments made or received in connection with a disposal are considered along with the Extra Statutory Concession D39 which may apply where a lease is extended.

Issues involving the Alteration of Terms in a Lease are considered at CG71350P.

Finally, the Merging of Leases is considered at CG71400.