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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Capital receipts not disposals: receipts exceed allowable expenditure

TCGA92/S23 (2), TCGA92/S122 (4), TCGA92/S133 (4) & TCGA92/S244 (2)

TCGA92/S23 (2), TCGA92/S122 (4), TCGA92/S133 (4), and TCGA92/S244 (2) counteract the possibility that, as a result of several applications of the rules relating to

  • small compensation receipts under TCGA92/S23 (1)(b) and TCGA92/S23 (1)(c), see CG15700+, or
  • small capital distributions in respect of shares under TCGA92/S122 (2), see CG57835+, or
  • small cash premiums in respect of conversions of British Government and other securities under TCGA92/S133, see CG55030, or
  • the small consideration for a disposal of land within TCGA92/S242, see CG71870+, or
  • the consideration for the disposal of a small piece of land within TCGA92/S243, see CG72200+,

the total of the receipts from a number of successive part- disposals may be greater than the cost of the asset. That is, the allowable expenditure becomes a negative or minus quantity. The above rules are not to apply if immediately before the part-disposal

  • there is no remaining allowable expenditure, or
  • that expenditure is less than the ‘small’ receipt.

Instead, the receipt of the consideration is to be treated as being for a part-disposal. Where there is some remaining allowable expenditure, the taxpayer may elect to set off the whole of that expenditure against the consideration received in computing the amount of the gain, leaving none to be allowed against a later disposal or part-disposal of the asset. The effect of this is to simplify computations by avoiding a succession of apportionments of diminishing small amounts of expenditure.