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On the disposal of an asset, the person making the disposal is entitled to deduct any expenditure wholly and exclusively incurred by that person in establishing, preserving or defending their title to, or to a right over, the asset¹. It should be noted that, in contrast to the provisions relating to expenditure on acquisition (see C2.202) or enhancement (see C2.206) of assets, those relating to expenditure on preserving the owner's title to the asset do not extend to expenditure incurred on behalf of the person making the disposal.

In practice, deduction of expenditure on preserving or defending title to assets may be restricted because of the exclusion of expenditure allowed in computing income or profits², if the asset has been a fixed asset used for the purposes of the trade and the costs were incurred in defending the title to the asset. For more details, see B2.408.