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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Compensation: assets damaged/destroyed: destroyed buildings: ESC D19

ESC/D19 & TCGA92/S23 (6)

In law a building is part of the land on which it stands, see CG70205. The building and the land are a single asset. So the destruction of a building cannot be the loss or destruction of an asset because the land remains. Therefore relief would not be due under TCGA92/S23 (4) when a building is destroyed without special provision. Relief may be due under Section 23(1) if the compensation is applied in restoring the building. See CG15700+.

ESC/D19 allowed relief under Section 23(4) where a building was destroyed or irreparably damaged and any compensation was used to acquire or construct a replacement building on other land. For this purpose alone the concession allowed both buildings to be treated as distinct from the land on which they stood. Relief was not available where the interest in the land on which the old building stood was a wasting asset.

ESC/D19 was legislated by FA96/SCH39/PARA3 as new TCGA92/S23 (6) and TCGA92/S23 (7) to apply to capital sums received on or after 6 April 1996. Relief is now available where the interest in the land on which the old building stood was a wasting asset, see CG15725.

If a claim under TCGA92/S23 (4) is made in respect of a building, then you make any necessary apportionment of cost between the building(s) and the land, TCGA92/S52 (4), before you look at the no gain/no loss provisions.