CG15150 - Expenditure: introduction

TCGA92/S38

It is important to remember that the taxation of Capital Gains is concerned with the gains on the disposal of assets.

Only expenditure which falls into the categories defined in TCGA92/S38 may be allowed in the deduction in calculating the amount of the gain or loss on a disposal.

The underlying principle is that (with certain specific minor exceptions) only clearly defined capital expenditure is allowable.

Except where there is specific provision to the contrary, allowable expenditure is restricted to sums for

• acquiring or creating the asset (see CG15161)
• enhancing its value (see CG15180+)
• establishing, preserving or defending title to or rights over the asset
• incidental costs of acquisition and disposal. (CG15250+)

The amount of allowable expenditure will normally be the amount that the acquirer expended. However, in certain circumstances you must substitute the market value of the asset acquired for the actual consideration, see CG14530.

In addition, no item of expenditure can be deducted for Capital Gains purposes more than once from any sum or from more than one sum. This is stated in TCGA92/S52 (1).

Sums allowable in computing income or profits are not allowable for CG purposes, see CG14300+.