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Where a person (X) makes payments of rent under a lease or an asset, obtains a deduction by way of tax relief (see B5.410) in respect of the payments, and X or an associate of X obtains a capital sum in respect of the lessee's interest in the lease, the recipient of the sum is charged to tax as miscellaneous income on the total amount of deductions on which X has obtained tax relief in respect of the asset, limited to the amount of the capital sum received. The charge arises at the time the sum is obtained¹. An amount charged to income tax is treated for income tax purposes as an amount of income². For corporation tax purposes the charge is treated as a charge to corporation tax on income³.

A similar charge arises where the interest in the lease which is sold belonged to an associate of X; if the associate (or an associate of the associate) receives the capital sum, the charge