C2.1210 Disposal of a lease
On the disposal of a lease with a duration of more than 50 years no special adjustment is required as none of the expenditure is written off. Allowable expenditure in respect of a lease having a duration of 50 years or less at the date of disposal must be written down for the purpose of computing chargeable gains or losses on the disposal. For leases of assets other than land expenditure is written down on a straight line basis1. For examples, see C2.902. For leases of land the basis of writing down expenditure is the table set out in TCGA 1992, Sch 8, para 1 (see C2.1204).
A lease of Blackacre was granted in 1946. In June 2011, when the lease had 40 years still to run, B paid £87,000 for the assignment of the lease to himself.
B sold the lease in June 2020, 9 years later, for net proceeds of £184,000, and at the time of the disposal the lease had 31 years still to run.
The capital gains computation for the disposal in June 2020 is as follows—