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HMRC internal manual

Business Income Manual

Miscellaneous income: scope of the provisions: isolated sales of assets

S687-S689 Income Tax (Trading and Other Income) Act 2005, S979-S981 Corporation Tax Act 2009

Casual profits made from the isolated buying and selling of assets may be taxable as trading income: see BIM20230 for further guidance.

If the activity falls short of a trade then the question is whether the profits come from the increase in value of a capital asset. A capital profit is not taxable as miscellaneous income.

Sales of single assets

A profit on the sale of a single item that is not a trading venture will be a capital accretion and not taxable as miscellaneous income.

This has been made clear in a number of cases. In Ryall v Hoare [1923] 8TC521 Rowlatt J said at page 525:

‘That rules out, of course, the well-known case of a casual profit made upon an isolated buying and selling of some article; that is a capital accretion.’

and:

‘a casual profit made on an isolated purchase and sale, unless merged with similar transactions in the carrying on of a trade or business is not liable to tax.’

A similar point was made in Leeming v Jones [1930] 15TC333 where Lawrence LJ said at page 354 in a judgment approved in the House of Lords:

‘It seems to me in the case of an isolated transaction of purchase and resale of property there is no middle course open. It is either an adventure in the nature of trade, or else it is simply a case of sale and resale of property.’