Land

Produced by Tolley
Land

The following Personal Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Land
  • Part disposals
  • General rule
  • Alternative basis
  • Small part disposals
  • Small part disposals where proceeds exceed cost
  • Compulsory acquisition
  • Apportionment of compensation
  • Date of disposal
  • Rollover relief
  • More...

If an individual disposes of land (which includes buildings and any estate or interest in land or buildings), on first principles it will be taxable as either:

  1. trading income (if it is a trade or a venture in the nature of trade), or

  2. a capital gain (but see anti-avoidance below)

For a discussion of when the disposal of land or buildings could be considered to be trading income, see the Application of the badges of trade guidance note. The rules on treating the sale as trading income have priority over the capital gains tax treatment discussed in this guidance note.

However, what if the disposal of land is not considered to be a trade or a venture in the nature of trade but it is still a disposal with the intention of making a profit similar to that of a property dealer? This is where the transactions in UK land anti-avoidance provisions bite to treat the gain as trading income. The conditions and the types of situation caught by this anti-avoidance provision are discussed in detail in the Transactions in UK land ― individuals guidance note.

The commentary below explains the various types of part disposal associated with land. Guidance notes on topics associated with the disposal of land but not specifically covered within this note are listed below in ‘Other points to consider’.

When calculating the capital gain or loss, you should take account of the HMRC ‘Capital gains tax for land and buildings’ toolkit. The aim of the toolkit is to prevent common errors made by practitioners in the capital gains tax reporting of disposals of land and buildings.

Part disposals

When a taxpayer makes a disposal of part of his holding of land, you need to consider the following provisions in order to report the sale correctly.

General rule

The general rule for part disposals is discussed in detail in the Basic calculation principles of capital gains tax guidance note. Basically, the base cost (or market value as at

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