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HMRC internal manual

Capital Gains Manual

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Mineral leases: terminal loss relief: introduction

TCGA92/S202

When the underlying minerals have been extracted from land, the value of that land can be considerably diminished. If certain conditions are satisfied, then where either a mineral lease ends or the land is disposed of prior to its expiry, a `terminal loss relief’ can be claimed.

This relief has been withdrawn by FA 2012/Sch 39/Para 46 for any mineral leases or agreements commencing on or after 1 April 2013 (for businesses subject to Corporation Tax) and 6 April 2013 (for businesses subject to Income Tax). Terminal loss relief will continue to apply to mineral leases and agreements entered into before those dates but which end (or are disposed of) after those dates.

Definitions

TCGA92/S202 and ICTA88/S122

The terms `minerals’, `mineral royalties’ and `mineral lease or agreement’ are defined in full in ICTA88/S122. Brief definitions can be found in CG71702.

`Relevant event’ means either the expiry or termination of the mineral lease or agreement or the disposal (deemed or actual) of the land subject to the mineral lease or agreement, TCGA92/S202 (2).

`Terminal loss’ means a loss arising as the result of a claim under TCGA92/S202 (3) or (7).