Revenue Note for Guidance
This section provides the basic rule whereby any part of the consideration for the disposal of an asset which is chargeable to income tax, or taken into account in computing income, profits, gains or losses for income tax purposes, is not to be taken into account again in computing chargeable gains for the purposes of capital gains tax.
(2) Any money or money’s worth charged to income tax or taken into account in computing income, profits, gains or losses for the purposes of income tax is excluded from the charge to capital gains tax. By virtue of section 78(6), any part of the consideration for a disposal which is taken into account as income for corporation tax purposes is similarly excluded from the charge to capital gains tax. However, where a life assurance company is not charged in respect of its life assurance business under Case I of Schedule D, the mere inclusion of profits from the realisation of investments in a computation for the purposes of restricting management expenses relief under section 707 will not prevent a charge to capital gains tax on gains from disposals of life fund investments.
(3) The basic rule set out in subsection (2) is not to apply so as to exclude from the consideration any amount which is taken into account in making a balancing charge for capital allowances purposes under Part 9 or Chapter 1 of Part 29.
(1) & (4) The basic rule set out in subsection (2) also does not apply so as to preclude the taking into account in a capital gains tax computation of the capitalised value of a rent (including any rent charge, fee farm rent and any payment in the nature of a rent) or other periodic payments despite the fact that the payments constitute income for income tax or corporation tax purposes.
Relevant Date: Finance Act 2021