I purchased father’s house for half its value 15 years ago and in return granted him a 999-year lease for life and a peppercorn rent, the lease to end on death. Father went into a nursing home and wanted to relinquish his responsibilities to the lease and for the house to be sold; his way of getting things in order. He applied to the court and the charge (the lease) on the property was removed. He died the day the lease was removed. The property has now been sold. How would capital gains be calculated? 
 
Arthur Weller replies:  
When the lease was removed, the property became solely yours since you always owned the freehold. If you look at HMRC’s guidance in the Capital Gains manual (at www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg71230), you can see that since this assignment/surrender of the lease was between connected persons (father and child) it took place at market value. The Capital Gains manual at CG14530 states that market value is also your acquisition value. The difference between this market value and the sale proceeds of £180,000 is the capital gain.