CG14295 - Computation: date of disposal: Notification, Assessment and Claim time limits for disposals under contract

As discussed on earlier pages, for many capital gains purposes, where disposal and acquisition take place under contract, s28 TCGA92 fixes the time of disposal.

The actual disposal, of an asset will sometimes take place in a tax year different to the date of disposal fixed by s28. In April 2023 new rules were introduced to amend the time limits for assessments and for notifying allowable losses. These rules apply in cases where the time between the date of disposal as fixed by s28 and the actual disposal is over a certain limit (s28A).

Disposals on or after 6 April 2023

S28A will apply:

  • For individuals, where an asset is disposed of under a contract entered into on or after 6 April 2023, and the actual disposal, or deemed disposal is more than 6 months after the end of the tax year in which the disposal is treated as taking place.
  • For companies, where an asset is disposed of under a contract entered into on or after 1 April 2023, and the actual disposal, or deemed disposal is more than 12 months after the end of the accounting period in which the disposal is treated as taking place.

In cases where s28A applies, the usual notification deadline and assessment and claim time limits (see disposals before 6 April 2023 below) are amended. They operate by reference to the tax year or accounting period when the contract is completed instead of by reference to the tax year or accounting period in which the contract for the disposal was made.

S28 fixes the date of disposal. As a consequence of these new time limits, it may be necessary to make further adjustments to a person’s tax liability, for example to utilise a loss.

Example

On 12 May 2023, Mr Blue entered into an unconditional contract to sell a painting. Mr Blue disposed of the painting on 31 December 2024.

Because that disposal took place under contract, s28 applies. So although the actual disposal took place on 31 December 2024, s28 provides that any chargeable gain is treated as arising on 12 May 2023 (the date the contract was made). As the disposal took place more than 6 months after the end of the tax year ended 5 April 2024, s28A applies. This means that the usual notification deadline and assessment and claim time limits operate by reference to the tax year ended 5 April 2025.


Disposals before 6 April 2023


For disposals under contract prior to 6 April 2023 (1 April 2023 for companies), the usual notification deadline and assessment and claim time limits apply.