CG71242 - Leases: disposal: extension of lease: ESC D39

ESC/D39

In practice, the surrender of an existing lease and the grant of a new lease should not be treated as a disposal for Capital Gains Tax purposes if the taxpayer so wishes and all of the following conditions are satisfied:

  • the transaction, whether made between connected or unconnected parties, is made on terms equivalent to those that would have been made between unconnected parties bargaining at arms length;
  • the transaction is not part of or connected with a larger scheme or series of transactions;
  • a capital sum is not received by the tenant;
  • the extent of the property under the new lease is the same as that under the old lease;
  • the terms of the new lease (other than its duration and the amount of rent payable) do not differ from those of the old lease. Trivial differences should be ignored.