CGT on Compulsory Purchase Order sale?

CGT on Compulsory Purchase Order sale?

14:56 PM, 19th December 2018, About 4 years ago 9

Text Size

My property was sold under a Compulsory Purchase Order (CPO). I was advised I could roll over the capital gains if I used the proceeds to buy another investment property. I have seen two accountants to try and find out if I need to inform the Inland revenue and if so how or I can just go ahead and use the proceed to acquire another property.

The property was bought under right buy scheme with value of £92k and after discount I paid £ 2005. After purchase in 2005 I lived there with my family and moved out to live in another property in 2008. I rented the property. This year in August the compulsory purchase completed and I was paid £205000 as the value of the property and £15375 home loss payment. £14100 disturbance payment including stamp duty for replacing the peoperty plus solicitors and surveyor.s fees of £1020 and £3405 respectively.

What was I was not advised on is whether I need to inform the inland revenue and if so how.

Do I have to buy a property of the same value or can I buy of higher value mortgaging the the difference?

Is the home loss and disturbance payment part of capital gain calculation?

Thank you for any assistance.


Editor’s Note:

From HMRC .Gov website click here:

Compulsory purchase

If your land is compulsorily purchased, you are subject to Capital Gains Tax in the normal way, but there are some special rules. These:

  • determine the date of disposal
  • provide for some small disposals not to be treated as a disposal
  • allow for any gain arising to be rolled over against the acquisition of new land in certain circumstances
  • provide for an apportionment of the compensation between its constituent factors

Date of disposal

Where land is acquired by an authority exercising compulsory powers, the date of disposal is the time at which the compensation for the acquisition is agreed, or otherwise determined. Any variation on appeal is ignored.



11:35 AM, 20th December 2018, About 4 years ago

Judy, I don't have the answers to your questions but when I next go and see my accountant which will now be in January next year, as most accountants are very busy this month due to tax deadline, I shall ask him for you, but it would be most interesting why was your property slapped a CPO ?

was it because you had it long term empty? i.e. you did not rent it out or lived in it yourself.

Yvette Newbury

12:17 PM, 20th December 2018, About 4 years ago

Click on the HMRC Gov website link under the Editor's note. That will help answer your query. From my reading of it you should inform HMRC by completing a CGT form, and tick the box showing the most appropriate code for your situation, after calculating what you believe your gain would be. You can buy a property of higher value and it's base cost at purchase will be reduced by the rolled over gain from the previous property (on which normally you would be due to pay CGT). HMRC categorise the other payments received (home loss disturbance etc) on the link above and state which are taxed under CGT and which are subject to income tax. I hope this helps.

Mike T

20:18 PM, 20th December 2018, About 4 years ago

Reply to the comment left by Yvette Newbury at 20/12/2018 - 12:17
Also be aware that HMRC require you to notify them within a certain time (can't remember whether if it's 30 days ! - do check it out quickly. I was unaware and by the time I knew of it I was to late - got 'fined' a £100 for late notification)


12:51 PM, 21st December 2018, About 4 years ago

Reply to the comment left by Mike at 20/12/2018 - 11:35
I consider it good luck, it was a lemon.


15:11 PM, 21st December 2018, About 4 years ago

Reply to the comment left by J Aruna at 21/12/2018 - 12:51
I thought it was a Melon🤔

Richard York

18:27 PM, 21st December 2018, About 4 years ago

Bit worried you got a 'home loss payment' in the CPO, considering you weren't living there.

Normally you will only qualify if you actually are resident.


20:11 PM, 21st December 2018, About 4 years ago

Reply to the comment left by Richard York at 21/12/2018 - 18:27
I asked to be compensated for a full year rent loss they called it home loss.

Richard York

20:27 PM, 21st December 2018, About 4 years ago

Reply to the comment left by Ciru at 21/12/2018 - 20:11
Lucky you, discretion of the scheme I suppose.

Yvette Newbury

9:29 AM, 22nd December 2018, About 4 years ago

We have a rental property that has a demolition order on it (since 2005!) and we will receive an additional payment too. Those who are resident in their property (owner occupiers) receive a 10% payment whereas we will receive 7.5%.

Leave Comments

In order to post comments you will need to Sign In or Sign Up for a FREE Membership


Don't have an account? Sign Up

Landlord Tax Planning Book Now