CG72600 - Land: development value
Introduction
The value of land often increases dramatically when it acquires development value, for example following its adoption within a Local Authority development plan or following the granting of planning permission. This fact has given rise to numerous special rules, and indeed special taxes. The main examples are as follows:-
- For land held at 6 April 1965, and disposed of with development value, time- apportionment (see CG15500) does not apply.
- For disposals between 6 April 1967 and 22 July 1970, Betterment Levy, was chargeable; the general guidance on this has now been archived.
- For disposals between 18 December 1973 and 31 July 1976, there was a special charge on development gains; the guidance on this has now been archived.
- For disposals between 1 August 1976 and 18 March 1985, Development Land Tax, was chargeable; the general guidance on this has now been archived.
The only special rule which is still of general relevance is the mandatory 6 April 1965 valuation rule where rebasing to March 1982 is not required (mainly for companies who have not made a rebasing election), although where Betterment Levy or Development Land Tax has been paid on a previous occasion, special reliefs may be available.
Assets held on 6 April 1965 disposed of with development value
TCGA92/SCH2/PARA9 (2)
Where land with development value is sold, and that land was held at 6 April 1965, time-apportionment, see CG15500, is not appropriate since the growth in value of the land over the period of ownership is unlikely to have been uniform. Hence, the land is deemed to have been disposed of and immediately reacquired at its market value on 6 April 1965. That value then becomes the cost for the purposes of TCGA92/S38 (1)(a) (but subject to the rebasing rules in TCGA92/S35, see CG16700C).
The detailed guidance on this topic has now been archived. If you encounter a case where land with development value, that was held at 6 April 1965, is not subject to rebasing and has been disposed of, please make a referral to CG Technical for advice or view the archived guidance.
Betterment Levy
TCGA92/SCH11/PARA17
Where Betterment Levy has been charged in respect of the land which has been disposed of, certain additional expenditure may be allowable under TCGA92/S38 (1)(b).
The detailed guidance has now been archived so if you encounter such a case, please make a referral to the CG Technical Team for advice.
Development Land Tax
Where Development Land Tax has been charged in respect of land which has been disposed of, the ‘slice’ of development value charged to Development Land Tax is not charged to Capital Gains Tax or to Corporation Tax on chargeable gains.
The detailed guidance has now been archived so if you encounter a case where Development Land Tax was charged in the past, please make a referral to the CG Technical Team for advice.