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HMRC internal manual

Capital Gains Manual

Consideration for disposal: meaning of: right to series of payments

TCGA92/S37 (3)

The consideration for the disposal of an asset may include the right to receive a series of payments. These payments may be instalments of a capital sum or they may be a series of income payments, for example a rent charge, ground annual or feu duty.

If the payments are instalments of a capital sum the amount to bring into the computation as the disposal consideration will depend on whether the sum is ascertainable or unascertainable at the date of the disposal, see CG14881. If the payments are income receipts the capitalised value of the right to receive the income payments forms the consideration for disposal. The income payments should be charged to Income Tax in the normal way when they are received.

Exceptions

There are two exceptions where the capitalised value of the right to receive income payments is not included in the disposal consideration:

  • Rent payable under a lease or other rent for user.
  • An unsecured annuity granted as consideration for the disposal of a share in a partnership (subject to the practice outlined at CG28400+).