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Posted Thu, 03 Mar 2022 15:40:42 GMT by KwanWerd
I own the freehold of a house that has been converted into two flats. I have been asked to extend the lease on one of the flats by the lessee because the remaining term has dropped below 80 years. I agreed to extend the lease without charging a premium. Do I still need to declare this on my self assessment form as a disposal of an asset even though I have not made any capital gain?
Posted Fri, 04 Mar 2022 16:51:09 GMT by HMRC Admin 2

If the extension is not provided for in the terms of the original lease, then the extension is actually the surrender of the old lease (a disposal by the lessee) and grant of a new lease by the lessor.  

If no premium is paid on the grant of a lease, and provided that the grant of the lease was an arm’s length transaction, no chargeable gain will accrue.

You can find further guidance here:

CG70800P - Capital Gains Manual: Land: Leases: Granting of a lease: Introduction: contents

Thank you.

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