Taxation of Chargeable Gains Act 1992 section 245

Compensation paid on compulsory acquisition

Section 245 deals with how compensation or purchase price received on a compulsory acquisition of land should be split between capital and revenue elements for chargeable gains purposes.

• Compensation received on a compulsory purchase of land may be apportioned into capital and revenue elements, even though the total sum is legally indivisible
• The fact that the acquisition is or could have been compulsory must be disregarded when deciding how to apportion the compensation, as must any statutory rule treating the payment as solely for the land itself
• The capital elements of the compensation are treated in the same way as any other capital sums derived from chargeable assets, using a just and reasonable basis of apportionment
• Where the compensation includes an amount for severance from, or injurious affection to, other land retained by the same person, there is deemed to be a part disposal of that other land