½Û×ÓÊÓƵ

Trading in land

B5.216 What constitutes trading in land?

The problem of distinguishing between capital and revenue transactions is invariably more difficult in relation to land, because, perhaps more so than most other assets, it can constitute either an investment or trading stock. If a landowner, finding their property appreciating in value, sells part of it and uses the money to develop the remaining parts, they are not necessarily carrying on a trade or business. The landowner may only be developing the land in the proper way and realising it, in which event the profits should not be taxable as trading profits but may be taxable as a chargeable gain or under anti-avoidance provisions¹. On the other hand, a company which was formed to trade in land, and which buys land, develops it and sells it, would probably be held to be trading in land, and to be assessable on trading income. There can be many intermediate cases, and the decision in any