Commentary on Sections Overview Overview Section 261: Adjustment on change of basis
943.This section sets out the circumstances in which an adjustment may arise. It is based on section 64 of FA 2002. The equivalent rule for trades is in section 180. The corresponding rule for income tax is in section 329 of ITTOIA.
944.In the source legislation the change of basis rules apply to a Schedule A business because they are “other rules applicable to Case I of Schedule D” (see section 21B of ICTA). On the other hand, for an overseas property business section 70A(5) of ICTA imports only “the rules applicable to the computation of the profits” (see section 21A of ICTA). So the change of basis rules do not apply to an overseas property business.