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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Charities: Reverter of Sites Act 1987

Under the School Sites Act 1841, land could be conveyed to trustees who would hold the land for the purposes of a school. This would be a charitable trust, but as there would generally be neither income nor chargeable gains, there would be no local office or HMRC Charities file for the trustees. If the land ceased to be used for the purposes of the school, the land would revert to the original donor, or more probably, his or her heirs. Similar provisions provided for the transfer of sites for places of worship and museums. The Reverter of Sites Act 1987 provides that where the closure occurs on or after 17 August 1987 the trustees thereafter hold the property in trust for the person(s) with the right of reversion.

Unless exceptionally the person with the right of reversion is itself a charity, the closure of the school, place of worship or museum means that the property is no longer held on charitable trusts, and, therefore, there is a deemed disposal and reacquisition of the land (including the buildings) under TCGA92/S256 (2). If, as would normally be the case, it is necessary to value the land at 31 March 1982, the correct basis for valuation is of the property in the state it was in on that date, without any reduction for the possibility of reverter. The Valuation Office Agency should be advised accordingly. The trustees are chargeable on the gain at 18% for 2008-09 onwards, at the RAT (rate applicable to trusts) for 1999-2000 to 2007-08 and at the basic rate for years up to and including 1998-99. Assessments should be made in the appropriate trust District.