HMRC internal manual

Capital Allowances Manual

General: Combined sales: Sale of interest in land with asset

An interest in land to which an asset that qualifies for capital allowances is attached may be sold. The asset may be a building, structure or fixture. If so you need to apportion the sale price to find out how much of the sale price is attributable to the asset. The normal apportionment provisions in CAA01/S562 (1) - (3) CA12100 apply and you should make a just apportionment. There is also specific legislation in CAA01/S440 for RDA, which requires a just apportionment to be made of the sale price. If you open an enquiry into the apportionment:

  • You must consult the District Valuer before agreeing or accepting any apportionment; unless the asset is a fixture and an election has been made under CAA01/S198 CA26800.
  • You must use the figures that the District Valuer gives you subject to any statutory override; for example in claims to plant and machinery allowances section 62(1) or section 185 CAA 2001.
  • You must not settle cases by negotiating adjustments to those figures yourself.

If a building which has qualified for RDAs ceases to belong to the taxpayer other than by a sale at open market value the building is treated as if it has been sold at open market value (CAA01/S443). Where a fixture has qualified for machinery and plant allowances various events are similarly treated as sales at open market value although the taxpayer’s disposal value would usually be limited under CAA01/S62 to the original cost (see CA26700).

You must not agree the open market value of the interest in land and the apportionment to the asset without the approval of the District Valuer.

You should request assistance from the District Valuer in a memo. You should not use the capital gains form CG20. The District Valuer provides both not negotiated and agreed valuations and apportionments. You should normally ask for an agreed valuation or apportionment.

Your note to the District Valuer should include the following information:



  • the name of the taxpayer,
  • the address of the property,
  • what the valuation or apportionment required is,
  • why the valuation or apportionment is required (the type of allowances being claimed or to be apportioned),
  • the date on which the valuation or apportionment is to be made,
  • whether an agreed or not negotiated valuation or apportionment is required,
  • a description of the property in question (including a plan if necessary),
  • a description of the assets which you accept as qualifying for capital allowances,
  • details of the taxpayer’s interest in the property (freehold or leasehold),
  • statement of what the interest in land is (freehold or leasehold),
  • if the taxpayer’s interest is leasehold or if it is subject to a tenancy, the date of the commencement of the lease, the length of its term, the rent at the date(s) of valuation or apportionment, the dates of any rent review and any other provisions in the lease (or a copy of the lease),
  • the taxpayer’s apportionment or valuation together with a copy of any professional valuation,
  • the name and address of a contact from whom the District Valuer can obtain any further information he needs,
  • where an agreed apportionment is required the name and address of the person with whom the District Valuer should negotiate,
  • the name and address of any other taxpayer with whom the District Valuer should negotiate (because their tax liability will also be affected by the valuation or apportionment in question).