CG14261 - Introduction and computation: computation: date of disposal: disposals under contract
Source: gov.uk (2025-11-11)


Throughout this manual, all legislative references are to Taxation of Chargeable Gains Act 1992 (https://www.legislation.gov.uk/ukpga/1992/12/contents) (TCGA 1992) unless otherwise stated.

It is important to identify whether a contract is in place when an asset is disposed of as this will influence the date of disposal for capital gains purposes. See CG14250 (https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg14250) for general information about the determining the date of disposal.

What is a contract?

There is no definition of a contract in the capital gains legislation. The position will follow the applicable law.

Under English and Welsh law, a contract does not usually need to be made in writing by any formal document or phrases. One exception to this is that a contract for the disposal of an interest in land in England and Wales must be made in writing, see CG70280 (https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg70280).

In cases of serious doubt, or if the law of another country applies, HMRC staff should seek support following the process outlined on the Contacting Us page on the Capital Gains Network SharePoint site.

Oral contracts

An oral contract may not be enforceable, but this does not prevent it from being a contract of disposal for capital gains purposes. There is authority for this in the case of Thompson v Salah [1972]. The principles of this case apply for capital gains purposes although it concerned Case VII Schedule D (short term gains).

How does section 28 apply to contracts?

Where an asset is disposed of under contract, section 28 (https://www.legislation.gov.uk/ukpga/1992/12/section/28) fixes the time of disposal and acquisition for many (although not all) capital gains purposes. See below for interactions between section 28 (https://www.legislation.gov.uk/ukpga/1992/12/section/28) and other capital gains rules where timing is important.

Section 28 (https://www.legislation.gov.uk/ukpga/1992/12/section/28) provides that the time of disposal and acquisition is the time the contract is made, or, if the contract is conditional, the time when the conditions are satisfied. See below for more information on what makes a contract ‘conditional’.

Section 28 (https://www.legislation.gov.uk/ukpga/1992/12/section/28) can only apply once an actual disposal or deemed disposal has taken place. See CG12700P (https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg12700p) for guidance on disposals.

Example – how section 28 applies to contracts

On 12 May 2023, X entered into an unconditional contract to sell a painting to their sister. X disposed of the painting to their sister on 1 September 2024.

Because that disposal took place under contract, section 28 (https://www.legislation.gov.uk/ukpga/1992/12/section/28) applies. So although the actual disposal took place in on 1 September 2024, section 28 (https://www.legislation.gov.uk/ukpga/1992/12/section/28) provides that any chargeable gain is treated as arising on 12 May 2023 (the date the contract was made).

On 5 September 2023, X entered into another unconditional contract to sell another painting. However, on 6 October 2023, both parties agreed to terminate the contract and not go ahead with the sale. Although there was a contract for sale, there was no disposal and so section 28 (https://www.legislation.gov.uk/ukpga/1992/12/section/28) does not come into operation.

Interaction of section 28 and other rules

As set out in CG14250 (https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg14250), there are various capital gains rules for which timing is important, for example to determine the availability of a relief or period of ownership of an asset. Where there is a disposal under contract, you may need to look at different dates for different purposes.

The chargeable period will always follow the date given by section 28 (https://www.legislation.gov.uk/ukpga/1992/12/section/28) (unless overridden by other statute, see CG14250 (https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg14250) for specific statutory rules for dates of disposal).

There are however capital gains purposes for which we look to the time of actual disposal or acquisition, such as, for example, the period of ownership for private residence relief, see CG64923 (https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg64923).

Several different interactions between section 28 (https://www.legislation.gov.uk/ukpga/1992/12/section/28) and other rules can be found at the Capital Gains manual pages as indicated below:
- market value (section 17 (https://www.legislation.gov.uk/ukpga/1992/12/section/17)), see CG14530 (https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg14530)
- transactions between connected persons (section 18 (https://www.legislation.gov.uk/ukpga/1992/12/section/18)), see CG14560 (https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg14560)
- allowable expenditure (section 38 (https://www.legislation.gov.uk/ukpga/1992/12/section/38)), see CG15180 (https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg15180)
- private residence relief (sections 222 to 226B (https://www.legislation.gov.uk/ukpga/1992/12/part/VII/crossheading/private-residences)), see CG64923 (https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg64923)
- roll-over relief (sections 152 to 159A (https://www.legislation.gov.uk/ukpga/1992/12/part/V/chapter/I/crossheading/replacement-of-business-assets)), see CG60292 (https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg60292)
Conditional and unconditional contracts

A contract will be ‘conditional’ where there is a condition precedent, see Eastham v Leigh London & Provincial Properties Ltd [1971] and Lyon v Pettigrew [1985]. This is a question of contract law, rather than tax law.

Under the law of England and Wales, broadly, there will be a condition precedent in a situation where the contract is only legally binding on the parties once that condition is fulfilled. This is different from obligations that the parties need to fulfil in accordance with the contract, before it completes (sometimes called ‘conditions subsequent’).

In cases of serious doubt, or if the law of another country applies, seek support following the process outlined on the Contacting Us page on the Capital Gains Network SharePoint site.