Income Tax Act 2007 section 517L

Gain attributable to period before intention to develop formed

Section 517L provides relief by excluding from the income tax charge on UK land transactions any portion of a profit or gain that is fairly attributable to the period before the person formed the intention to develop the land or became involved in the relevant arrangement.

• Where land has been developed with the purpose of realising a gain on disposal, any part of the profit fairly attributable to the period before the intention to develop was formed is excluded from the income tax trading profits charge.
• Similarly, where a person disposes of property deriving its value from UK land under an arrangement, any part of the profit fairly attributable to the period before that person became party to or concerned in the arrangement is excluded.
• In both cases, the legislation treats the person as though they had not realised the excluded portion of the profit or gain.
• When applying this relief, account must be taken of the rules in Part 2 of ITTOIA 2005 governing the treatment of a person who appropriates land as trading stock.