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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Capital Gains Manual: Introduction and computation: occassions of charge: exchanges of assets: no cash adjustment: land: disposal proceeds and acquisition cost

CG13090 tells you that where unconnected persons, who are acting at arm’s length, exchange assets, they are likely to make an adjustment for any difference in the value of the assets. This represents additional consideration in the hands of the person who receives it.

If, in example 2, see CG13094, there had been no consideration other than the exchange of assets and the values used were agreed, X’s chargeable gain would be increased by £500 and Y’s chargeable gain reduced by £500. The acquisition cost of X’s new asset, the painting, would be reduced by £500 and Y’s acquisition cost of the piece of jewellery increased by £500.

Land

You will find that land often features in exchange transactions, particularly where shares in properties are exchanged. A common example is where the two joint owners of two properties each give up a half share in one property and assume full ownership of the other. The result is that each taxpayer disposes of their half share in one property and acquires the remaining half share in the other. In principle, these exchanges are treated in the same way as other exchanges of assets.

However, in certain circumstances a form of roll-over relief may be available under TCGA 1992/92 248A to 248E for disposals on or after 6th April 2010, see CG73000+

Where the exchange involves properties which are the only or main residence of the individuals who are exchanging interests, see CG65150+.

Disposal proceeds and acquisition cost

Any values you agree as the disposal proceeds or acquisition costs for assets which have been exchanged, will also be the disposal proceeds, or acquisition costs, for any claim to roll-over relief, see CG60250+ and, in particular, CG60280.