What does section 517J of the Income Tax Act 2007 require?

Section 517J requires that any apportionment needed under the transactions in UK land rules (Part 9A) must be made on a just and reasonable basis. No fixed formula or prescribed method is specified. The approach must fairly reflect the economic reality of the situation, depending on the specific facts and circumstances of each case.

What types of amounts can be apportioned under section 517J ITA 2007?

Section 517J applies to apportionments of expenditure, sale consideration, or any other amount relevant to calculating taxable profit under the transactions in UK land rules. For example, where a single price covers both land and other assets, the consideration must be split on a just and reasonable basis to determine the correct taxable amount.

How is a just and reasonable apportionment determined for UK land disposals?

There is no fixed formula. The person making the apportionment must adopt an approach that fairly reflects economic reality. Professional valuations are commonly used. If HMRC disagrees with an apportionment, the question will be whether the basis chosen was objectively fair and sensible in light of the available evidence.

Can you give an example of a just and reasonable apportionment under section 517J?

If a taxpayer sells UK land and shares together for a single lump sum, they must apportion the total consideration between the two assets. Obtaining professional valuations for each asset and splitting the price proportionally based on those valuations would normally be regarded as a just and reasonable apportionment under section 517J.

Income Tax Act 2007 section 517J

Apportionments

Section 517J requires that any apportionment needed under the rules taxing profits from disposals of UK land must be made on a just and reasonable basis.

Applies to all apportionments required under the transactions in UK land rules (Part 9A)
Covers apportionments of expenditure, consideration, or any other amount
The basis of every apportionment must be just and reasonable
No specific method is prescribed — the approach must simply be fair and sensible in the circumstances

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