CG15161 - Expenditure: allowable: cost of acquisition or creation

TCGA92/S38 (1) (a)

If the disposer acquired the asset this is consideration which was given wholly and exclusively for the acquisition of the asset plus the incidental costs of acquisition. If the disposer created the asset to provide it - for example, copyright or goodwill of a business - the cost of acquisition is the expenditure wholly and exclusively incurred by him or her in creating it, if any.

There are special rules which apply where a person owned an asset at 6 April 1965 (but not for disposals by individuals, trustees and personal representatives on or after 6 April 2008) or 31 March 1982. The person may be able to substitute the market value at the relevant date for the actual cost. For guidance see CG15500+ and CG16700+ respectively.

For the acquisition cost of land with development value, see CG72600+.

Assets acquired for consideration due after date of acquisition

An asset may be acquired under an agreement which provides that all or part of the consideration payable will be due after completion of the agreement, the amount to be determined by reference to some future event. The amount which the purchaser actually pays under the terms of the agreement should be regarded as the cost of acquisition withinTCGA92/S38 (1)(a), see CG15130.