CGT—land and leases
CGT—land and leases

The following Property guidance note provides comprehensive and up to date legal information covering:

  • CGT—land and leases
  • Basic principle
  • Leases
  • Definition of lease
  • What is a long and short lease?
  • Grant of a long lease out of a freehold or long leasehold interest
  • Grant of a short lease out of a freehold or long leasehold interest
  • Grant of a short lease out of a short leasehold interest
  • Other sums received
  • Assignment of a lease
  • more

Basic principle

An individual works out the gain or loss when land is disposed of in the same way as for other assets. There are some special rules for working out gains and losses if the individual:

  1. grants a lease

  2. assigns or surrenders a lease

  3. disposes of land that has been compulsorily purchased

Leases

For tax purposes as the landlord has retained a part of the interest the grant of a lease is a part disposal whether out of a freehold or leasehold interest.

Grants of leases fall into three categories:

  1. a long lease out of a freehold or long leasehold interest

  2. a short lease out of a freehold or long leasehold interest

  3. a short lease out of a short leasehold interest

Definition of lease

For capital gains tax (CGT) purposes a lease includes:

  1. subleases

  2. tenancies

  3. licences

  4. any interest corresponding to a lease

What is a long and short lease?

A long lease is a lease with more than 50 years remaining. A short lease has 50 years or less remaining. A long lea