188体育

The exchange of one asset for another is a chargeable occasion for both parties involved.

There are, however, special rules which apply in cases involving

• the conversion of securities, see听CG55000+
• certain exchanges of shares or debentures, see听CG52521+
• the transfer of a business to a company in exchange for shares, see听CG65700+
• the exchange of joint interests in land, see听CG73000+.

Transactions otherwise than by way of a bargain made at arm鈥檚 length

Where assets have been exchanged in transactions otherwise than by way of a bargain made at arm's length, the disposal proceeds are taken as the market value, at the date of exchange, of the asset disposed of, see and CG14480P.听

Example 1

In June 2022, X acquired a piece of jewellery for 拢5,000 and in June 2023 his brother Y acquired a painting for 拢4,000. In July 2024 when the piece of jewellery had a market value of 拢8,000 and the painting a market value of 拢8,500 the two articles were exchanged.

As X and Y are connected persons the disposal proceeds are the market values, at the date of exchange, of the assets exchanged,.

Disposal of jewellery by X

Value of jewellery at date of exchange	拢听
Disposal proceeds	8,000
Less cost	5,000
Equals chargeable gain	3,000

Disposal of painting by Y

Value of painting at date of exchange	拢
Disposal proceeds	8,500
Less cost	4,000
Equals chargeable gain	4,500

The cost of the new acquisition in each case is the market value of the asset at the date of exchange, see .听Therefore X鈥檚 acquisition of the painting in June 2023 for its market value of 拢8,500 and Y鈥檚 acquisition of the jewellery for its market value of 拢8,000.

Transactions by way of a bargain made at arm鈥檚 length

In a transaction by way of a bargain made at arm鈥檚 length, the disposal proceeds are the market value of the asset received. The market value of the assets at the date of exchange would be expected to be the same and, if not, the parties to the exchange would make any necessary cash adjustment for any difference in the value of the assets. This represents additional consideration in the hands of the person who receives it.

Where necessary,听valuations for both taxpayers who have exchanged assets should be considered together. Any values agreed as the disposal proceeds or acquisition costs for assets which have been exchanged,听will also be the disposal proceeds, or acquisition costs, for any claim to roll-over relief, see听CG60250+听and, in particular,听CG60280.

A valuation will not normally be necessary where an asset is acquired by a company in an exchange at arm鈥檚 length for an issue of its own shares and the price at which those shares are to be allotted is specified in the contract, see Stanton v Drayton Commercial Investment Co Ltd 55TC286. You can accept the contract price in such cases, although you should make a submission to the Capital Gains Technical team, see CG99998 in any case where there is a long delay between the making of the contract and the issuing of the shares.听

Example 2

In June 2022, X acquired a piece of jewellery for 拢5,000 and in June 2023 his Y acquired a painting for 拢4,000. They are unconnected persons. In July 2024 when the piece of jewellery had a market value of 拢8,000 and the painting a market value of 拢8,500 the two articles were exchanged. A cash adjustment was made equal to the difference in the values so that X paid 拢500 to Y.

Disposal of jewellery by X

Value of painting at date of exchange less cash听adjustment paid by X to Y	拢
Disposal proceeds	8,000
Less cost	5,000
Equals chargeable gain	3,000

Disposal of painting by Y

Value of jewellery at date of exchange plus cash adjustment received by Y from X	拢
Disposal proceeds听(拢8,000 + 拢500)	8,500
Less cost	4,000
Equals chargeable gain	4,500

The cost of the new acquisitions in each case is the value of the consideration given, see .

Acquisition cost of painting by X

Consideration given = value of jewellery at date of exchange (拢8,000) plus cash payment to Y (拢500) = 拢8,500.

Acquisition cost of jewellery by Y

Consideration given = value of painting at date of exchange (拢8,500) minus cash adjustment (拢500) = 拢8,000.

听

If there had been no consideration other than the exchange of assets and the values used were agreed, X鈥檚 chargeable gain would be increased by 拢500 and Y鈥檚 chargeable gain reduced by 拢500. The acquisition cost of X鈥檚 new asset, the painting, would be reduced by 拢500 and Y鈥檚 acquisition cost of the piece of jewellery increased by 拢500.

Land

Land often features in exchange transactions,听particularly where shares in properties are exchanged. A common example is where the two joint owners of two properties each give up a half share in one property and assume full ownership of the other. The result is that each person disposes of their half share in one property and acquires the remaining half share in the other. In principle, these exchanges are treated in the same way as other exchanges of assets. However, in certain circumstances a form of roll-over relief may be available under to s248E, see听CG73000+.听

Where the exchange involves properties which are the only or main residence of the individuals who are exchanging interests, see听CG65150+.