Taxation of Chargeable Gains Act 1992 section 243

Part disposal to authority with compulsory powers

Section 243 provides a relief that allows a landowner to elect that a small part disposal of land to a body with compulsory purchase powers is not treated as a disposal for capital gains tax purposes, with the proceeds instead reducing the base cost of the remaining holding.

• Where only part of a land holding is compulsorily acquired and the consideration is small relative to the value of the whole holding (HMRC accepts 5% or less, or up to £3,000 if greater), the landowner can claim that no disposal has occurred for CGT purposes
• The landowner must not have taken any steps, such as advertising, to make known a willingness to sell any part of the holding to the acquiring authority or anyone else
• If the claim is made, the compensation received is deducted from the allowable expenditure (base cost) of the remaining holding, so that the gain is effectively deferred until a future disposal
• Claims must be made within roughly 21 months of the end of the tax year for CGT purposes, or within two years of the end of the accounting period for corporation tax purposes