Income Tax (Trading and Other Income) Act 2005 section 307F

Deemed capital receipts under, or after leaving, cash basis

Section 307F sets out the circumstances in which a person using the cash basis for a property business is treated as having disposed of an asset even though no actual sale has taken place, and how the deemed disposal amount is calculated.

• Where an asset ceases to be used for a property business without being sold, the owner is treated as having disposed of it at market value at the time it stops being used for the business.
• Where non-business use of an asset increases materially, the owner is treated as having disposed of a proportion of the asset equal to the increase in non-business use, again at market value.
• Where a person carrying on an overseas property business moves overseas — by ceasing to be UK resident or entering the overseas part of a split year — any asset whose capital cost was previously relieved is treated as disposed of at market value on the date of the move.
• Market value means the amount that would be regarded as normal and reasonable between parties dealing at arm's length in the open market under prevailing conditions.