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Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 13974
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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Here is the situation: a tenant of long standing is surrendering

Customer Question

Here is the situation: a tenant of long standing is surrendering his tenancy for an amount of money and relinquishing all rights to his tenancy. He has lived in the residential property for many years. He has had no other abode apart from this tenancy and does not own any property.
Is the surrender money taxable or not? I think not because the position is similar to that of a home owner who resides in his own property and then sells and no tax is payable.
Is there HMRC ruling on this point?
Submitted: 1 year ago.
Category: Tax
Expert:  Sam replied 1 year ago.
Hi Thanks for your question No it is not taxable as its compensation foe the inconvenience of having to move before he may have initially wanted to and also had the legal right to have to. So this payment recongnises those factors Only IF interest were to be added onto the compensation would any tax arise ( on the interest element only) Thanks Sam
Customer: replied 1 year ago.
Thanks for this response. Can you please point me to the definitive ruling on this by HMRC? That would be most helpful
Expert:  Sam replied 1 year ago.
HI All compensation claims are tax free unless involving interest - see legislation here http://www.hmrc.gov.uk/manuals/saimmanual/saim2070.htm And I had already advised you re the interest position - should it be added or be included in such a payment then tax would be due on this part of the payment Thanks Sam
Expert:  Sam replied 1 year ago.
Let me know if I can be of any further assistanceThanksSam