What was the purpose of section 827 of the Corporation Tax Act 2010?

Section 827 allowed a company to exclude from the Part 18 special tax charge the portion of a land disposal gain that arose before the company formed any intention to develop the land. This ensured only the development-related uplift in value was taxed, recognising that earlier increases were unrelated to development purposes.

When was section 827 of the Corporation Tax Act 2010 repealed?

Section 827, along with the whole of Part 18 of the Corporation Tax Act 2010, was repealed by section 77(4) of the Finance Act 2016 with effect for disposals of land on or after 5 July 2016. It was replaced by the broader regime in Part 8ZB of the Corporation Tax Act 2010 for taxing profits from dealings in UK land.

How was the gain split under section 827 of the Corporation Tax Act 2010?

Under section 827, the total gain on a land disposal was divided into the portion arising before the company formed an intention to develop and the portion arising afterwards. Only the post-intention gain fell within the Part 18 charge. For example, general market appreciation before a development intention was formed could be excluded entirely from the special charge.

Does Part 8ZB of the Corporation Tax Act 2010 provide an equivalent carve-out to section 827?

No. The replacement regime in Part 8ZB of the Corporation Tax Act 2010, introduced by the Finance Act 2016, takes a broader approach to taxing profits from dealing in or developing UK land and does not replicate the specific carve-out that section 827 formerly provided for gains arising before a development intention was formed.

Corporation Tax Act 2010 section 827

Gain attributable to period before intention to develop formed

Section 827 provided a method for isolating the portion of a land disposal gain that arose before the company formed an intention to develop the land, thereby excluding that portion from the special tax charge on land transactions.

Where land was sold at a gain and part of that gain related to a period before the company had any intention to develop the land, that earlier portion could be excluded from the charge under Part 18 of the Corporation Tax Act 2010.
The section applied specifically to gains caught by the provisions taxing profits from dealing in or developing UK land, ensuring only the development-related uplift in value was brought into charge.
This provision was relevant where land had been held for some time before a development intention was formed, recognising that some of the increase in value was unrelated to any development purpose.
Section 827, along with the whole of Part 18 of the Corporation Tax Act 2010, was removed by the Finance Act 2016 with effect for disposals on or after 5 July 2016, when it was replaced by a new and broader regime for taxing gains from dealings in UK land.

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