Taxes Consolidation Act 1997 Schedule 14 paragraph 9

Duration of leases

Paragraph 9 of Schedule 14 sets out rules for determining the duration of a lease of land for capital gains tax purposes, particularly where the lease contains break clauses, extension options, or terms that make early termination likely.

• Where a landlord has the right to terminate a lease by notice, the lease is treated as lasting only until the earliest date on which the landlord could exercise that right.
• Where the terms of the lease or other circumstances make it unlikely the lease will run its full term, the lease is treated as ending on the date beyond which it is unlikely to continue.
• Where a tenant has an option to extend the lease, the duration is treated as including the full extension period, but subject to any landlord's right to terminate.
• The duration of a lease is determined by reference to the facts known or ascertainable at the time the lease was acquired or created, whether by original grant or by assignment.