HMRC internal manual

Capital Gains Manual

Capital sums derived from assets: section 22 TCGA 1992: meaning of ‘capital sum’

Section 22(1) TCGA 1992 provides that there is:

“…a disposal of assets by their owner where any capital sum is derived from assets notwithstanding that no asset is acquired by the person paying the capital sum…” (emphasis added).

The term ‘capital sum’ is defined in subsection (3) as:

“…any money or money’s worth which is not excluded from the consideration taken into account in the computation of the gain.”

A receipt of money or money’s worth would fall to be excluded from the consideration to be taken into account for chargeable gains purposes if it was charged to tax as income or taken into account as a receipt in calculating income profits, gains or losses of the recipient (see section 37(1) TCGA 1992; CG10260). Therefore any part of the receipt which is brought into account for income tax purposes cannot be treated as a capital sum for the purposes of section 22.

Guidance on the treatment of compensation as an income receipt is given at BIM40100+.

Money’s worth

Money’s worth can include:

  • something which is convertible into money, or
  • something which is capable of being valued in monetary terms (Chaney v Watkis 58TC707)