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Capital sums derived from assets

Capital sums derived from assets

1 February 2024

HMRC views a capital sum from an asset as a disposal for capital gains under section 22 TCGA92. HMRC's guidance highlights the ordinary meaning of 'disposal,' covering natural and part disposals.

The relevant legislation treats the owner as having made a disposal for capital gains purposes when a capital sum is derived from an asset, as per HMRC’s clear guidance.

The legislation contained in s22 TCGA92 states that there is:

“…..a disposal of assets by their owner where any capital sum is derived from assets notwithstanding that no asset is acquired by the person paying the sum…..”

On certain occasions, a person may receive a capital sum. That is even without a natural disposal of an asset occurring. This can happen, for instance, when receiving compensation for asset damage. Or a sum for the right to use or exploit an asset.

According to HMRC’s internal manual, interpreting TCGA92, the term ‘disposal’ lacks an explicit definition, requiring its normal everyday meaning. Hence, disposals for capital gains encompass natural disposals and part disposals of assets.

Source: HM Revenue & Customs Tue, 30 Jan 2024 00:00:00 +0100

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