What does section 764 of the Income Tax Act 2007 require for property valuations?

Section 764 requires that any property valued for the purposes of the transactions in land provisions must be assessed at its market value. This means the price the property would fetch on the open market between a willing buyer and a willing seller, determined in accordance with general tax valuation principles.

How must apportionments be carried out under section 764 of ITA 2007?

Any apportionment of consideration, receipts, or expenses required under the transactions in land provisions must be made on a just and reasonable basis. This prevents taxpayers from making artificially skewed allocations that would reduce the income tax charge, ensuring amounts are split fairly and proportionately between different transaction elements.

What is the legislative history of section 764 of the Income Tax Act 2007?

Section 764 derives from the former section 777(6) of the Income and Corporation Taxes Act 1988. It was subsequently amended by the Finance Act 2016 and the Finance (No. 2) Act 2017 as part of wider reforms to the United Kingdom transactions in land regime targeting income tax avoidance.

How does section 764 apply to a mixed property transaction involving land?

Where a single transaction involves mixed elements such as commercial and residential property, section 764 requires the total proceeds to be apportioned on a just and reasonable basis. This is typically done by reference to the relative market values of each element, ensuring the correct taxable amount is attributed to the land component.

Income Tax Act 2007 section 764

Valuations and apportionments

Section 764 deals with how valuations and apportionments are to be made when applying the provisions relating to transactions in land.

Where it is necessary to determine a market value for any property for the purposes of the transactions in land rules, that value must be established in accordance with standard valuation principles.
Any apportionment of consideration, receipts, or expenses that is required under the transactions in land provisions must be carried out on a just and reasonable basis.
This ensures that where a transaction involves multiple elements or mixed purposes, the amounts attributable to each element are split fairly and proportionately.
The section supports the broader anti-avoidance framework for transactions in land by ensuring that values and allocations cannot be manipulated to reduce or avoid an income tax charge.

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