Taxation of Chargeable Gains Act 1992 section 47A

Exemption for certain disposals under, or after leaving, cash basis

Section 47A provides an exemption from capital gains tax when a business asset (other than land) is disposed of and the proceeds are already being taxed as income under the cash basis rules or the rules that apply after leaving the cash basis.

• The exemption prevents double taxation by ensuring that where disposal proceeds are already taxed as income receipts under the cash basis (or post-cash basis) rules, no chargeable gain arises for capital gains tax purposes.
• Three conditions must be met: the asset must not be land (Condition A); the asset must have been used for the purposes of a trade, profession, vocation or property business carried on by the person disposing of it (Condition B); and the disposal proceeds must be brought into account as an income receipt under specified provisions of ITTOIA 2005 (Condition D).
• Where an asset has been used only partly for business purposes, or only for part of the ownership period, or expenditure on it has only partly qualified for capital allowances, the consideration and costs are apportioned — only the business-related portion benefits from the CGT exemption.
• "Property business" for these purposes covers both UK property businesses and overseas property businesses as defined in Part 3 of ITTOIA 2005.