Taxes Consolidation Act 1997 section 99

Charge on assignment of lease granted at undervalue

Section 99 imposes a tax charge under Case IV of Schedule D when a short lease (50 years or less) that was originally granted at undervalue is subsequently assigned to another person.

• Where a short lease is granted at less than its market value, the difference between the premium actually paid and the premium that could have been obtained at arm's length is the "amount forgone".
• On each assignment of the lease, the assignor is taxable on the excess of the assignment consideration over the original premium (or, for later assignments, over the previous assignment consideration), subject to a write-down of 2% for each complete year of the lease term except the first.
• Once the cumulative taxable excesses equal the amount forgone, no further charge arises on subsequent assignments; and if the assignment consideration does not exceed the previous consideration, no charge arises on that assignment.
• For dealers in land, any trading receipts chargeable under this section are excluded when computing the profits of the land-dealing trade.