BIM60105 - Land: Trading transactions: Acquisition and disposal of superior interest: Marriage value

Our argument is-

• such transactions involve two separate assets - the tenancy and the freehold.
• the tenancy is a capital asset and any gain on that asset will be a capital gain.
• the freehold was not acquired with the intention to retain but to sell at profit.
• the freehold was therefore never part of the purchaser’s capital structure and is not consequently a capital asset.
• it is the profit on the freehold alone that we wish to isolate and tax as the profit of an adventure in the nature of trade.
• that profit is part of a marriage profit which is generated when the tenancy and the freehold merge.