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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Introduction and computation: occasions of charge: assets lost/destroyed/negligible value: introduction


CG12940 tells you that, for Capital Gains Tax purposes, the receipt of a capital sum which is derived from an asset is a disposal of that asset.  The following paragraphs look at situations where a disposal is treated as taking place but no capital sum, is necessarily received (see CG12980) so that an allowable loss may accrue

There are two basic situations where there is a disposal of an asset without there necessarily being a receipt of a capital sum.  These are the actual loss of the asset (see below), and the notional loss of the asset (see CG13125).  You should, however, remember that any compensation for the loss, such as an insurance recovery, may give rise to a Capital Gains Tax charge, see CG12948 onwards.

Where such compensation is used to restore or replace the original asset, see CG15700+.

TCGA92/S24(1) - Entire loss or destruction of asset

Here we are looking at the actual loss of an asset.  Where the asset has been entirely lost, destroyed, dissipated or extinguished, then that is a disposal of the asset for Capital Gains Tax purposes, section 24(1).  Assuming that a gain on a disposal of the asset would have been a chargeable gain, then such a disposal will give rise to an allowable loss, TCGA92/S16(2).  See, however,

  • CG12340 if an option has been abandoned for no consideration
  • CG12965 regarding the interaction of section 24 with TCGA92/S22 if any capital sum by way of compensation or otherwise is received
  • CG15770 if buildings and structures on land have been destroyed
  • CG17700+ where indexation allowance is available
  • CG68070 if goodwill is claimed to have been destroyed.