Taxation of Chargeable Gains Act 1992 section Schedule 8 paragraphs 2–3

Premiums for leases

Section Schedule 8 paragraphs 2 and 3 deal with how lease premiums and certain other payments from tenants to landlords are treated as part disposals for capital gains tax purposes, and how various lump sum payments are deemed to be premiums.

• A premium paid for the grant of a lease is treated as a part disposal of the freehold or superior interest, with any retained right to rent valued at the time of disposal
• Lump sums paid by a tenant in lieu of rent, for surrender of a lease, or for variation or waiver of lease terms are all deemed to be additional premiums triggering a separate disposal event
• Where the landlord holds a lease of 50 years or less and receives a deemed premium (other than on surrender), the subtenant is treated as having incurred allowable expenditure equal to the deemed premium for the relevant part of the sublease
• Non-arm's length or gratuitous transactions are taxed as if a market-value sum had been paid by the tenant for the variation or waiver

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