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Section 40: Interest charged to capital.

Taxation of Chargeable Gains Act 1992 · 1992 c. 12View on legislation.gov.uk

Part II: General Provisions relating to computation of gains and acquisitions and disposals of assets — Chapter III: Computation of gains: General provisions

Where—

a company incurs expenditure on the construction of any building, structure or works, being expenditure allowable as a deduction under section 38 in computing a gain accruing to the company on the disposal of the building, structure or work, or of any asset comprising it, and
that expenditure was defrayed out of borrowed money,

the sums so allowable under section 38 shall, subject to subsection (2) below, include the amount of any interest on that borrowed money which is referable to a period or part of a period ending on or before the disposal.

Subsection (1) above has effect subject to section 39 and does not apply to interest which is a charge on income.

In relation to interest paid in any accounting period ending before 1st April 1981 subsection (1) above shall have effect with the substitution for all following paragraph (b) of— and subsection (2) above shall not apply.

In consequence of Chapter 2 of Part 4 of the Finance Act 1996 (c. 8) (loan relationships) and CTA 2009 (Part 5 of which re-enacts that Chapter) this section does not have effect in relation to interest referable to an accounting period ending on or after 1st April 1996.

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This legislation text comes from legislation.gov.uk. Contains public sector information licensed under the Open Government Licence v3.0. These source and reuse terms cover the legislation text, not Remedy's commentary.

Reuse reviewed 21 August 2026 under Open Government Licence v3.0.