The date of disposal for capital gains tax purposes

In this article we're going to discuss the date of disposal for capital gains tax purposes. You may also want to read this in conjunction with the tax rules covering allowable deductions for capital gains. 

Capital gains tax rules for disposal dates

Establishing the correct date of disposal for capital gains tax purposes is necessary to determine which tax year a transaction takes place. This can be important for example when making a disclosure to HMRC, ensuring any tax liability is paid on the correct date, or calculating what annual exemption is available. Additionally many reliefs are contingent on establishing the correct disposal date - for example Business Asset Disposal and Enterprise Investment Scheme reliefs. 

The date of disposal - an overview

The definition of the disposal date for tax purposes is set out here. Although it is also covered in more detail by HMRC in their published guidance.  These rules apply to individuals, partners, trustees and companies where an asset is disposed of and acquired under a contract.

Generally speaking, where the disposal of an asset is subject to contract the date of disposal for capital gains tax purposes is as follows:

  • The time at which the disposal (or acquisition) is made is the time the contract is made. It is not, if different, the time at which the asset is either conveyed or transferred
  • Where the contract is conditional (and in particular if it is conditional on the exercise of an option) the date at which the disposal takes place is when the condition is satisfied.

Land and property disposals

Typically where you sell land or property with a non-conditional contract the date of disposal is the date contracts are exchanged and not the completion date. There are a few exceptions to this rule for land and property disposals, the most notable ones being where a non-UK resident disposes of a UK residential property, or land has been  acquired under compulsory purchase powers. 

Conditional contracts

When a contract is conditional, the date of disposal is not the date of exchange (see above) it is when all the conditions of the contract are satisfied.

A contract is regarded as conditional when conditions need to be satisfied before it can become legally binding - these are known as 'Conditions precedent'.

A contract is not conditional where those conditions don't prevent the contract from being legally binding. These are referred to as  'Conditions subsequent'. If they occur they may cancel the contract though not prevent its commencement.

Exceptions to the general rule

There are some situations where the disposal date for capital gains tax purposes is different to those disposals subject to contract. These exceptions are set out below. 

Capital sums derived from assets

There might be a deemed disposal. though no acquisition. This would typically involve receiving a capital sum derived from an asset. An example of this would be where insurance proceeds are received for the damage or injury to, or the loss or depreciation of, assets. Someone might also receive a capital sum in return for the forfeiture or surrender of rights, or for refraining from exercising certain rights.

In such cases the date of disposal is deemed to be when the capital sum is received.

Negligible value claims

If you are making a negligible value claim then the date of disposal is the amount as specified in the claim. This can potentially be a date within two years before the time of the claim. You can see more details about this here.

Assets demolished - buildings

The entire loss, destruction, dissipation or extinction of an asset can potentially be considered a deemed disposal.

A building may be regarded as a separate asset from the land on which it is built for capital gains tax purposes. Therefore in circumstances where a building is entirely demolished this can be treated as a deemed disposal.

If this tax treatment is applied, the date of disposal can be considered as the time of demolition. However this treatment is optional and HMRC's default position would be that the demolition costs would usually be regarded as enhancement expenditure to be accounted for on a later disposal.


Where a person gifts an asset, the date of disposal is regarded as when beneficial ownership passes. This will depend on the general legal formalities required to make the transfer of ownership. For example, if it is a chattel such as a antique furniture or a painting, the date of disposal will be the date it is delivered to the donee.

Transfer to a trust

The creation of a trust deed may transfer the title of assets to the trustees. Where this is the case, the date of disposal will be the date of the deed. In other cases, the disposal date will usually be the same as for gifts (above).


When you transfer your business to a limited company. The date of disposal of your business would usually be the date you formed your company.

Companies going into liquidation

Where a company is being liquidated or struck off, frequently interim distributions are made to shareholders as part of the process of dissolving the company. If that's the case, each interim distribution will have a date of disposal on receipt. There will also be a final disposal date once the company is struck off.

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