Taxes Consolidation Act 1997 section 641

Computation under Case I of Schedule D of profits or gains from dealing in or developing land

Section 641 sets out the rules for computing the profits of a business of dealing in or developing land where that business is, or is treated as, a trade or part of a trade.

• Any consideration received for the disposal of an interest in land (other than rent or a premium taxed under section 98) is treated as a trading receipt from the disposal of trading stock.
• An interest in land that has become trading stock remains trading stock until the trade is discontinued, and land acquired other than for money or money's worth is treated as acquired at market value.
• A payment by the trader to buy out a ground rent or annuity charged on land is not deductible unless the annuity arises under a will, the payment is for genuine consideration taxed in the recipient's hands, or the recipient is unconnected with the trader and has never dealt in land.
• Where an intermediary buys out an annuity on behalf of the trader before the trader acquires the land, the trader is treated as having paid only the unencumbered price for the land, and the excess is treated as a non-deductible annuity buy-out payment.