C2.101 Consideration for disposal

Capital gains tax
Capital gains tax | Commentary

C2.101 Consideration for disposal

Capital gains tax | Commentary

Part C2     Computation of chargeable gains

Contents of Part C2

C2.1     Disposal consideration

C2.2     Allowable expenditure

C2.3     Indexation allowance

C2.4     Part disposals

C2.5     Compensation and insurance receipts

C2.6     Assets held on 31 March 1982

C2.7     Shares and securities—general

C2.8     Shares and securities—special cases

C2.9     Wasting assets

C2.10     Options

C2.11     Land and interests in land

C2.12     Leases

[C2.13]     [Rewritten—Private residence exemption]

Division C2.1     Disposal consideration

For updates affecting this Division please see Part C0 Updates

Disposal consideration—generally

C2.101 Consideration for disposal

For capital gains tax purposes, it is necessary to establish the value of the disposal consideration upon which the capital gains computation is based.

General rule

The general rule is that on a disposal by way of a bargain at arm's length between persons who are not connected with each other, the consideration will be the amount of money or money's worth which is expressed under the contract as the consideration passing1. This is unaffected by any agreement between the parties as to how the money is to be applied2.

There may be doubt in cases where a monetary amount is expressed to be the consideration but the consideration is to be satisfied by the receipt of property other than money. The question arises whether the value of the property may be substituted for the monetary amount of consideration. In Stanton3, the courts considered the question in circumstances where the taxpayer company had acquired investments from an insurance company in consideration for the issue of its own shares. The contract was conditional

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