Personal Tax

Assignment and grant of leases for capital gains tax

Produced by Tolley
  • 22 Mar 2022 09:42

The following Personal Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Assignment and grant of leases for capital gains tax
  • Assignment of a long lease
  • Assignment of a short lease
  • Grant of a long lease from a freehold or long lease
  • Grant of a short lease from a freehold or long lease
  • Short lease granted from a short lease
  • When does a lease end for tax purposes?
  • Valuations
  • Acquisition of leases
  • Extending a lease
  • More...

Assignment and grant of leases for capital gains tax

A lease is the right to use an asset. Where the asset in question is land or buildings, the lease is the right to occupy the land or buildings for a specified period of time, usually in return for a specified rent.

Contrast this to a freehold, which is the outright ownership of the property and the land upon which it is built. Freehold and leasehold are separate assets and, as such, a lease can be bought and sold in its own right as well as granted (ie created from a freehold or another leasehold).

This guidance note considers the capital gains tax position on:

  1. assignment of a long lease (over 50 years to run)

  2. assignment of a short lease (50 years or fewer to run)

  3. grant of a long lease

  4. grant of a short lease

Assignment is the legal term for disposal of a lease.

Disposals of leases may need to be reported and any estimated capital gains tax paid with 60 days of the conveyance of the land. See the Disposals of UK land ― capital gains tax compliance regime guidance note.

Whether or not the disposal has already been reported to HMRC, if a self assessment tax return is required, the disposal should be reported on the capital gains summary supplementary pages. Computations of the chargeable gain or allowable loss must be submitted with the tax return.

When calculating the capital gain or loss, you should consider the HMRC ‘Capital gains tax

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