Capital gains treatment of the costs of a long residential lease extension

My question is about the treatment of costs related to a 90-year lease extension. Briefly: I bought a leasehold flat on the open market in an arms-length transaction in 2010, and took up residence in it. The lease length was 125 years from 1982. In 2021 I bought a house and moved out of the flat, renting the flat to tenants (became a landlord). In 2024 I extended the lease on the flat by 90 years using the statutory process of section 42 notice, counter-notice, etc. Lease is now 215 years from 1982. Later this year I will sell the flat, on the open market, in an arms-length transaction. This will lead to a capital gain In the capital gain calculation, I understand I can deduct the costs of sale and purchase such as solicitors fees, surveys, etc. I also understand that I can use the residential relief rules to reduce the taxable gain based on the ratio of days in residence vs not in residence. What I'm not clear on is how to treat the lease extension. The extension is for more than 50 years on a lease that was already more than 50 years, so I believe it's treated as a capital cost. But I'm not sure which bits of the cost can be offset against capital gains. For example, I have incurred costs such as: My own surveyor My own legal costs The lessor's surveyor The lessor's legal costs The lease premium itself How should each of these be treated for capital gains purposes upon the sale of the flat?

Hi

HMRC cannot comment on future events as legislation and/or plans may change. For current guidance, please refer to CG70700P - Capital Gains Manual: Land: Leases: Introduction: contents and
CG15180 - Expenditure: enhancement expenditure

Thank you

That's fair enough. Can you then explain to me how these things are treated under the rules of today? I have already looked at the resources you refer to and they are not enlightening, which is the reason for my question.

Hi

The current guidance was given in our original reply and as advised HMRC cannot comment on future events as legislation and/or plans may change.

Thank you