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Why is the date of disposal important?

When someone has disposed of an asset (or where the law deems a disposal), it is necessary to identify the date of the disposal. This is important as it will determine the tax year (or, for companies, accounting period) in which any chargeable gain arises. The date of disposal could impact:

• the deadline for declaring the disposal
• the rate of tax charged
• the date that any tax owing must be paid
• in the case of individuals, the annual exempt amount (“AEAâ€�) that is available
• whether or not the gain is chargeable, for example if an individual is resident in the UK in one tax year but not in another

There are other capital gains rules for which the dates on which someone owned or ceased to own an asset are important, for example to determine the availability of a relief. You may sometimes need to look at different dates for different purposes. For example, the date of acquisition and date of disposal that apply to determine the tax year of the disposal will not necessarily be the same as the dates used to determine the period of ownership for private residence relief,Ìý(see CG64923).Ìý You are most likely to need to consider two different dates for two different purpose in this way when there is a disposal under contract. CG14261 provides further guidance on disposals under contracts and on interactions between different rules.

In addition, it will always be important to confirm whether there has in fact been a disposal. CG12700+ provides information about determining whether a disposal has taken place, including deemed disposals.

How to determine the date of disposal

Where disposal and acquisition take place under contract, in most circumstances, fixes the time of disposal.

• If the disposal is made under an unconditional contract the date of disposal is the date the contract is made ().
• If the contract is conditional the date of disposal is the date all of the conditions are satisfied (), see CG14261.

If there is a disposal and there is no contract, the general rule is that the date of disposal is the date the actual disposal or deemed disposal occurs, see CG12700P.

There are however a number of situations where statute prescribes a specific date:

a)ÌýÌýÌýÌý Where a capital sum is derived from an asset there is a deemed disposal under . The date of the deemed disposal is the will depend on the circumstances, see CG12960.

b)ÌýÌýÌýÌý Where an asset has been entirely lost, destroyed, dissipated, or extinguished then the date of disposal is the date of the deemed disposal of the asset, , see CG13120.

c)ÌýÌýÌýÌý Where a claim is made by the owner of an asset that it has become of negligible value, the date of the deemed disposal is the date of the claim, or an earlier time if specified (), see CG13130.

d)ÌýÌýÌýÌý Where land is acquired under compulsory purchase powers, applies. The date of disposal will depend on the circumstances, see CG72101.

e)ÌýÌýÌýÌý A debt is disposed of when it is repaid, assigned or extinguished (), see CG53405.

f)ÌýÌýÌýÌýÌý In the case of a transfer by trustees to a beneficiary, there has been a disposal at the date when the beneficiary became absolutely entitled to the asset (), see CG37000+. The actual transfer to the beneficiary is not a further disposal.

g)ÌýÌýÌýÌý Where hire purchase agreements are entered into, the date of disposal is the start of the hire period when the purchaser obtains use and enjoyment of the asset (), see CG12850P.

h)ÌýÌýÌýÌý For appropriations to and from trading stock ( and ), the date of disposal is deemed to be the date of the appropriation, see CG67900.

i)ÌýÌýÌýÌýÌý Where there is a court order which transfers an asset, the date of disposal depends on the particular circumstances of the transfer, see CG22423.

j)ÌýÌýÌýÌýÌý For a capital distribution, the date of disposal is the date of receipt or entitlement (), see CG57800.

k)ÌýÌýÌýÌý Options (see CG12300+):

1. The grant of an option is a disposal of an asset (the option), and is a disposal under contract to which applies (see above).
2. Where an option to buy is exercised, however, the grant and subsequent exercise of the option are treated as a single transaction (). This is again a disposal under contract, but the contract is the contract for sale formed at the date of exercise of the option.
   

l)ÌýÌýÌýÌýÌý In cases where value shifting takes place, and there is no actual disposal, the date of disposal is deemed to be:

1. in the case of shares, this is the date value actually passes ()
2. in the case of certain lease transactions, this is the date rights are adjusted ()
3. in the case of rights, this is the date the right is extinguished (). See CG58859.
   

m)Ìý Ìý In cases where value shifting takes place and there is an actual disposal, the date of disposal is the date of the actual disposal ().

This list may not be exhaustive. If you encounter a scenario not covered in this list, it is important to consider whether the statute and guidance in this manual provides an answer.