The following Corporation Tax guidance note Produced by Tolley in association with Jackie Barker of Wells Associates provides comprehensive and up to date tax information covering:
This guidance note explains the various aspects which need to be considered in relation to a company’s disposal of premises and the calculation of the chargeable gains position.
The calculation of the tax position for a disposal of land and / or buildings will generally be computed in the same way as any other asset. For a general overview of the capital gains position of a company and the calculations required, please refer to the Calculation of corporate capital gains guidance note.
Where the disposal takes place between connected parties, or the asset is disposed of otherwise than by a bargain at arm’s length, the actual consideration is ignored and the market value of the asset is taken to be the proceeds for tax purposes.
For further guidance on what constitutes a disposal between connected parties and circumstances where the market value of the asset should be substituted for actual consideration, please refer to the Connected party disposals and Assets gifted to employees or shareholder family guidance notes.
Where only part of a company’s holding is disposed of, it is necessary to apportion the allowable cost under the part disposal rules using the following formula:
A = gross disposal proceedsB = market value of the part retained at the date of disposal
A = gross disposal proceeds
B = market value of the part retained at the date of disposal
TCGA 1992, s 42
There are special rules that may apply to the part disposal of land which provide relief against the potential chargeable gains. See the Part disposals guidance note.
The amounts that are allowable as a deduction from the disposal proceeds include the original acquisition cost and any incidental costs of acquisition or disposal.
Further details regarding these costs can be found in the Calculation of corporate capital gains guidance note.
Land and buildings are one of the main assets which may qualify for rollover relief. Where a property has had a gain rolled over against it, the allowable cost on a subsequent disposal should be reduced by the amount of the
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