CG15190 | Expenditure: enhancement expenditure: example

In March 2005, Mr T buys a plot of land for £200,000 (including expenses). This does not form part of a garden within TCGA92/S222. He lays out on it a tennis court at a cost of £5,000. In April 2010, he does away with the tennis court and builds in its place a swimming pool at a cost of £15,000. In February 2012 he sells the land for £250,000 (after deduction of expenses).

The £5,000 which he spent on the tennis court is not allowable because it is not reflected in the state of the land on its disposal. The computation is therefore as follows:

Net sale proceeds £250,000

Less Cost of land £200,000

Cost of swimming pool £15,000 £215,000

Capital Gain £35,000

NOTE: The demolition of a tennis court is not the `entire loss, destruction, dissipation or extinction of an asset' within TCGA92/S24 (1), see CG13120, because it is not an `asset': it is only part of an asset, the land. And it is not within Section 24(3), see CG15773 because it is not a building or a structure in the nature of a building.