Transitional measures applying to legacy leases

This section deals with the transitional measures applying to legacy leases. Together with freehold interests or freehold equivalents held prior to 1 July 2008, these leases are referred to as transitional properties.

Legacy leases are interests in property:

  • that were treated as a supply of goods under the old Value-Added Tax (VAT) on property rules
  • and
  • which is a lease of ten years or longer created prior to 1 July 2008.

The term does not include interests that constitute freehold equivalent interests.

The lease must:

  • have been held by a taxable person on 1 July 2008
  • and
  • form part of the assets of a business at that date.

The following come within the transitional measures:

  • the VAT treatment of the assignment and surrender of legacy leases
  • the VAT treatment of deeds of variation
  • how to account for VAT on legacy leases
  • Capital Goods Scheme (CGS) and legacy leases
  • legacy leases post-letting expenses
  • sale of a property following the surrender of a legacy lease
  • the VAT treatment of a legacy lease reversion.

Further guidance contains more detailed information on the VAT treatment of transitional measures applying to legacy leases.