Taxation of Chargeable Gains Act 1992 section 37

Consideration chargeable to tax on income

Section 37 prevents double taxation by requiring that any part of the disposal consideration already taxed as income is excluded from the capital gains computation, whilst setting out important exceptions to this rule.

• Where disposal consideration has already been charged to income tax or included in computing income, profits, gains or losses, it must be excluded from the capital gains computation — income tax takes priority over capital gains tax.
• Amounts dealt with under the capital allowances regime (balancing charges, plant and machinery disposal values, and research and development disposal values) are not excluded from the capital gains computation, even though they feed into income tax calculations.
• The capitalised value of recurring income streams — such as rentcharges, ground annuals, or rights to income over a period — can still be included as consideration in the capital gains computation.
• Where anti-avoidance rules for transactions in land or sales of occupation income cause a tax charge to fall on a different person from the one who realised the gain, the amount is still treated as if it were charged on the person who made the gain, provided the tax has been paid.