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HMRC internal manual

Capital Gains Manual

Land: compulsory purchase of land: special rule for small part-disposals


Where the land acquired under a compulsory purchase order was only part of a holding of land, and certain other conditions are satisfied, see CG72201, the taxpayer can claim that the special rule in TCGA92/S243 should apply. If this treatment is claimed, and if the relevant conditions are satisfied, the consequences are as follows.

  • No gain arises.
  • The compensation received is deducted from the allowable expenditure on the entire holding.

On a later disposal, or part-disposal, of the remainder of the holding, only the reduced expenditure is taken into account, see however CG17360+, regarding indexation allowance due on a later disposal.

NOTE. If a taxpayer is within the charge to Capital Gains Tax, neither indexation allowance nor taper relief apply to disposals of assets on or after 6 April 2008. Previously indexation allowance had been frozen at April 1998. Companies and other concerns within the charge to Corporation Tax are not affected by these changes. For indexation allowance see CG17207+ and for taper relief see CG17895+.