CG12993 - Capital sums from assets: rights of action: cost of acquisition

A right of action will almost invariably be acquired 'otherwise than by way of a bargain made at arm's length'. The cost of acquisition for Capital Gains Tax purposes therefore depends on the date the right was acquired by the person receiving the capital sum.

On or before 9 March 1981

If the right of action was acquired on or before 9 March 1981, it is deemed to have been acquired for a sum equal to its market value on the date of acquisition, CGTA79/S19 (3), see CG14550.

On or after 10 March 1981

If the right of action was acquired on or after 10 March 1981

and

• there was no disposal of the right of action by any other person corresponding to that taxpayer's acquisition of it

and

• as is usually the case, the taxpayer gave no consideration for its acquisition

then

it is treated as having been acquired for no cost, TCGA92/S17, see CG14550.

10 March 1981 was the date the provisions of what was CGTA79/S29A, now TCGA92/S17, came into effect, replacing CGTA79/S19 (3).

Held at 31 March 1982

If the right of action was held on 31 March 1982 and is disposed of on or after 6 April 1988 then the normal rebasing rules in TCGA92/S35 apply. CG16700+ tell you about these.

Acquired on death

If the right of action was acquired on the death of the original claimant, it is deemed to have been acquired at its market value on the date of death, TCGA92/S62 (1), see CG31160.