Taxation of Chargeable Gains Act 1992 section Sch 8 para 8

Duration of leases

Section Sch 8 para 8 sets out the rules for determining the effective duration of a land lease for capital gains tax purposes, taking into account landlord termination rights, tenant extension options, and circumstances that make early termination likely.

• Where a landlord can terminate the lease early by giving notice, the lease is treated as lasting only until the earliest date the landlord could end it
• Where lease terms or other circumstances make it unlikely the lease will continue beyond a particular date before its stated expiry, the lease is treated as ending on that earlier date — for example, where rent increases or more onerous tenant obligations kick in and the tenant has the right to terminate at that point
• Where the tenant has the right to extend the lease by giving notice, the lease is treated as lasting for the full extended period, subject to any landlord right to terminate
• The duration of a lease must be determined by reference to the facts known or ascertainable at the time the lease was originally acquired or created, not by reference to later events