Readers’ forum: Tax treatment on compensation payment for loss of light

My clients personally own some business premises which are used in their partnership trading business.

The property was acquired more than 20 years ago for about £200 000 and is now worth somewhere between £1m and £1.5m.

A developer has built a property alongside my clients’ premises and as a result there is a loss of daylight. My clients have engaged a professional who is successfully negotiating a loss of light claim. It is likely that the final settlement will be more than £150 000.

I have assumed that this compensation payment will fall to be assessed under the head of ‘capital sums derived from assets’ and as such will be wholly chargeable to capital gains tax. Not being familiar with this area of the capital gains tax code I would be grateful for advice when it comes to reporting the gain and whether there is any possibility of adjusting...