CG12730 | Part disposals: general: what is the asset

For capital gains purposes a ‘disposal’ includes a ‘part-disposal’ of an asset. This may take the form of a disposal of

• a physical part of the asset e.g. a sale of a part of a single holding of land, or

• an interest or right in or over the whole or part of the asset e.g. the grant of a lease over land by the holder of the freehold interest.

In addition, a part disposal of an asset is deemed to have taken place when a capital sum is derived from an asset, for example when compensation is received for damage to an asset.

There are special rules for the treatment of options, see CG12300+.

It follows that there is a part disposal of an asset when part of the value of the asset is realised.

What is the asset?

Sometimes you have to decide what is the asset before you can determine whether a disposal is an entire or a part-disposal. The word ‘asset’ is not defined in the TCGA and therefore must be given its natural meaning, subject to any inferences which can be drawn from the Act itself. From s38 and s42 it follows that an ‘asset’ is whatever is covered by a specific item of expenditure on an acquisition, whether made by purchase or otherwise (such expenditure being allowable under s38(1)(a), see CG15150.

See, however, CG71850 as regards the practice under which a part disposal of land may in certain circumstances, be regarded as a disposal of a separate asset.

Expenditure enhancing the value of an asset allowable under s38(1)(b) may alter the character of the asset but does not create a new asset. For example, if an established newsagent purchases an additional paper round and merges it with the main business, this is an addition to existing goodwill, not the acquisition of a separate asset.