We rent office space but are moving. We are on a short lease (7yrs remaining) and paid no premium initially. Looks like we'll have to pay a reverse premium to a prospective person we will assign the remaining lease to.
Treatment? I believe it's probably capital - does that mean it's a capital loss for the full amount we pay (and thus can be set against other capital losses) or is this one of these 'tax nothings', in which case, why?
Jim James
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Reverse Premium?
As it is not being paid by the grantor of the interest, I do not think the payment falls to be treated as a reverse premium with all the attached revenue basis tax implications.
http://www.hmrc.gov.uk/manuals/bimmanual/bim41110.htm
Accordingly therefore, ordinary tests should apply - lease is a capital asset, payment is made to obtain release from onerous capital asset, so capital expense. As the cost is not reflected in the state or nature of the asset on disposal, it is not included in any CG computation :
Thanks
Bit of a blow, but I had thought we wouldn't get any tax relief for it. Perhaps better to make the payment by making repairs to the property before vacating, or something else...