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HMRC internal manual

Capital Gains Manual

Roll-over relief: compulsory acquisition of land: new land

Subject to the exception below, new land may comprise any land including buildings on the land, any interests in or rights over land. New land does not include the cost of buildings, or additions to buildings on land that is already owned. Extra-Statutory Concession D22, which extends roll-over relief under TCGA92/S152 to include such a case, see CG60410, does not apply.

TCGA92/S248 (1)

New land is excluded from relief if both the following conditions apply:

  • The new land comprises a dwelling house or part of a dwelling house, or an interest in or right over or improvements to a dwelling house (the guidance in CG64230+ on the meaning of `dwelling house’ should be followed); and
  • if a disposal of the new land were to occur at any time within a period of six years from the date of its acquisition, the whole or part of the gain on its disposal would not be chargeable because of the provisions of TCGA92/S222 to TCGA92/S226, see CG64200+.

The result is, therefore, that the landowner who reinvests in property which is, or which becomes within six years, his only or main residence cannot benefit from a claim for roll-over relief under Section 247.

TCGA92/S248 (2)

Where there is a change in use of the new land after acquisition, the roll-over relief claim may need to be revised; all such adjustments and repayments as are necessary may be made without regard to time limits.

Where new land is acquired which seems suitable for use as a private residence by the new owner but which at the time of the roll-over relief claim is not used as a private residence by the owner, a forward note should be made to review the position at, say, the three or six year points after the date of acquisition in order to ensure that the property has not become the only or main residence of the landowner.