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HMRC internal manual

Capital Gains Manual

Expenditure: introduction

ONLY EXPENDITURE WHICH FALLS INTO CATEGORIES DEFINED IN TCGA92/S38 MAY BE ALLOWED AS A DEDUCTION IN CALCULATING THE AMOUNT OF GAIN OR LOSS ON A DISPOSAL. The underlying principle is that (with certain specific minor exceptions) only clearly defined capital expenditure is allowable.

The amount of allowable expenditure will normally be the amount that the acquirer expended. However, in certain circumstances you must substitute the market value of the asset acquired for the actual consideration, see CG14530.

Sums allowable in computing income or profits are not allowable for CG purposes, see CG14305.

For the effect of Value Added Tax (VAT), see CG14360.