Taxes Consolidation Act 1997 Schedule 14 paragraph 3

Premiums for leases

Paragraph 3 provides that where a premium is taken on the grant of a lease of land, the grant is treated as a part disposal of the larger interest out of which the lease is granted, with the value of the right to receive rent under the lease forming part of the value of the property remaining undisposed of.

• A premium taken on the grant of a lease of land triggers a part disposal of the freehold or superior leasehold interest from which the lease is granted.
• The chargeable gain is computed by applying the part disposal rules in section 557.
• In the part disposal apportionment, the value of the property remaining undisposed of must include the right to receive rent reserved under the lease.
• The right to receive rent is valued as at the time of the part disposal.