HMRC internal manual

Capital Gains Manual

Expenditure: incidental costs of acquisition and disposal

TCGA92/S38 defines the incidental costs of acquisition and disposal. The definition is exhaustive. No other expenditure is allowable unless specifically provided for by TCGA92 (see, for example, TCGA92/s143(6) (see CG56084).

If a disposal by a company (Company A) is deemed to have been made by another company (Company B) following an election under TCGA92/S171A (CG45355), incidental costs of disposal incurred by Company A which would have been allowable if the gain had been chargeable on Company A can be allowed in the computation of the gain chargeable on Company B.

Allowable incidental costs are limited to

  • fees, commission or remuneration paid for the professional services of any

 

  • surveyor, valuer or auctioneer
  • accountant or agent
  • legal adviser

 

  • costs of transfer or conveyance (including Stamp Duty or stamp duty land tax)
  • costs of advertising to find a buyer or seller
  • costs reasonably incurred in making any valuation or apportionment required for the purposes of the Capital Gains Tax computation.

The expenditure must have been incurred wholly and exclusively for the purposes of the acquisition or disposal.

 

You should allow a deduction for fees paid to a professional adviser only to the extent that they are directly referable to the cost of acquiring or disposing of each particular investment. To the extent that the fees relate to advice about the general state of markets or the prospects of particular forms of investment or the management of a portfolio, they are not allowable.

You should not allow a deduction for subscriptions for periodicals or for publications by analysts, stockbrokers or other professional advisers, whether for public or private circulation. Other similar types of expenditure are not allowable.

Accountant’s fees are allowable only to the extent that they relate to the ascertainment of market value of the assets or to any apportionment for the purposes of the computation. Otherwise, fees for the computation of liability are not allowable. It follows that, in the case of quoted securities, allowable accountancy fees will usually be very small. In respect of any extra accountancy fees incurred in agreeing a valuation, see CG15260.

For expenses of executors, see CG30550+.