Reverse premiums are payments or benefits that are, most commonly, given by landlords to prospective tenants to induce them to enter into a lease and, prior to specific legislation enacted with effect from 9 March 1999, were often treated by the tenant as capital receipts. However, as the tenant did not ‘dispose’ of an interest in any asset (indeed, the tenant was acquiring an asset – the lease), it was considered no capital gains tax liability could arise.

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