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cgt on grant of lease if no premium?

husband and wife own freehold to house (converted years ago in 3 flats - 2 rented). They retain the freehold but grant long leases to themselves (one flat each reaon being to get finance). is there cgt on the lease grant since there is no premium paid? thanks. 

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08th Nov 2018 14:48

There's no CGT because they're husband and fuching wife. If they were granting leases to other connected parties or otherwise than at arm's length, there would be an implied market value premium.

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By Ruddles
to Portia Nina Levin
08th Nov 2018 15:07

Not sure if the interspouse treatment would apply here.

But the myself to myself exemption might :)

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to Ruddles
08th Nov 2018 15:08

Well, I think it's half and half tbh.

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By Ruddles
to Portia Nina Levin
08th Nov 2018 15:30

Quite possibly. I was just amused by someone thinking that a CGT charge could arise on a disposal of something "to themselves".

In the general sense of course - I know that it can happen in the right (ie wrong) circumstances (in theory at least).

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By Rweaver
08th Nov 2018 19:20

Is it possible, at law, for an individual to hold two differing interests (e.g. freehold and leasehold) in the same land?

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to Rweaver
09th Nov 2018 10:40

If the same person legally (as opposed to beneficially) holds both the superior interest and the inferior interest, then those two interest do, indeed merge as a matter of law. The beneficial interests would be unaffected though, and might still exist hypothetically.

Here though, H&W seem to own (legally and beneficially) the freehold interest as joint tenants, and are granting legal leasehold interests to either H or W (to perhaps then be held for the joint benefit of H&W.

As a matter of law H&W (as joint tenants) does not equal H and does not equal W.

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By Rweaver
to Portia Nina Levin
09th Nov 2018 13:40

Thank you Portia - your reply is much appreciated.

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13th Nov 2018 16:53

Have seen similar problem for clients moving to US, who needed a step-up for US tax purposes for expensive London property, their PPR whilst UK resident. Property transferred to LLP consisting of H & W whilst UK resident, then moving to US. For US purposes this was treated as a disposal.
No UK tax on transfer, but future rent receivable of course subject to UK IT [ with credit in the US]

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