Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Appropriation definition

What does Appropriation mean? In practice, appropriation is the secured creditor taking ownership of financial collateral (or directing its transfer to a third party) to satisfy secured liabilities without a court order. It is a self-help enforcement remedy authorised by the Financial Collateral Arrangements (No. 2) Regulations 2003 (as amended), which implement the EU Financial Collateral Directive. It applies only to a “security financial collateral arrangement” and only where the security documents expressly provide a right of appropriation. Eligible collateral includes cash, financial instruments (for example, shares, bonds and other securities) and credit claims. On appropriation, the creditor must value the...

UK tax treatment of supervening land and property trades: appropriations to/from trading stock, CGT/CT elections, intra-group transfers, and evidencing intention

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Practice notes

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Whether dealings amount to trading or investment fundamentally drives the correct tax analysis for land and property transactions. Unlike many assets, indeed more than most other assets, land can be held either as an investment (that is, a capital asset) or as trading Stock. A taxpayer may acquire a property with a particular purpose, only for that purpose to alter over the course of Ownership. This note explains the idea of a supervening trade and outlines the tax effects when land or property is appropriated to, or removed from, trading stock. In this note, CGT refers to both Capital gains tax and corporation tax on chargeable gains.

Supervening trade

Land acquired as a capital asset or investment may later be developed or otherwise dealt with in such a way that it is then converted into the stock of a newly commenced trade—this is a ‘supervening trade’. There is judicial support for the notion in obiter dicta—for instance, Megarry J in the High Court (Chancery Division) in Taylor v Good at 287—even though that decision was later overturned on appeal. A supervening trade requires a clear and demonstrable shift in intention once the land has been acquired...

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Web page updated on 21/05/2026

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