Capital gains tax | Commentary

C1.325 Overview

Capital gains tax | Commentary

Compensation and insurance receipts

C1.325 Overview

The capital gains tax treatment of compensation and insurance receipts is discussed in detail in Division C2.5.

Where an asset is lost or destroyed, a capital sum received as compensation (whether under an insurance policy or otherwise) and wholly applied in replacement of the asset would, in principle, be treated as the consideration or part consideration received on the disposal of the old asset1.

Subject to certain conditions, the taxpayer may however make a claim2 to have the amount of the compensation treated as reduced to the acquisition cost of the asset, so that neither

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