Disposals of property deriving its value from land
It is possible to realise profits from the disposal of any property that derives its value from land rather than from the land itself. There are rules in the legislation to ensure the right amount of tax is paid where any property which derives its value from land is disposed of.
A new company is set up to acquire land and develop an office building thereon. The land is not held as trading stock. Once the development is completed, the intention is to sell the company shares as a means of disposing of the development (enveloping) rather than selling the land and buildings directly. If all of the conditions at s356OD CTA 2010 or s517 ITA2007 are met the rules will apply to tax the profit on disposal of the shares as income.