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Compulsory purchases of land under contract


Published: 16 Jan 2024 Update History

HMRC has updated its guidance to clarify the date of disposal where there is a compulsory purchase. Where a disposal is made under an unconditional contract, the date of disposal is the date the contract is made.

The updated guidance confirms HMRC takes the view that where land is acquired under a contract, the date of disposal should be determined according to s28, Taxation of Capital Gains Act 1992 (TCGA 1992)

Section 28 sets out that, for unconditional contracts, the date of disposal is the date the contract is made. For conditional contracts, the date of disposal is the time at which all the conditions of the contract are satisfied. The market value of the land would therefore be the value at that date.  

Where land is acquired, but not under a contract, HMRC’s position has not changed. The date of disposal is taken to be when the compensation for the compulsory purchase is agreed or determined. Where the amount is varied subject to an appeal, the appeals process is ignored for the purpose of determining the date of disposal.  

HMRC’s Capital Gains Manual has also been updated to reflect the position above.  

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