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The money received from selling fixed assets (such as land, buildings, vehicles, plant & equipment) is known as a capital receipt. The Goverment may also specify by regulation what constitutes a capital receipt - for example, if a local authority lends money to a third party for capital expenditure, repayment of the amount borrowed must be treated as a capital receipt.
There are statutory restrictions on how a capital receipt may be used - broadly, the money can only be used to repay debt or to pay for new fixed assets. The money may also be invested, pending use in one of these two ways. The extent of Government prescription regarding how capital receipts may be used has varied greatly over the years - at one point, the regulations changed every six months - and different rules have nearly always applied to capital receipts resulting from the sale of council housing. Currently, housing capital receipts are subject to regional pooling arrangements that do not apply to other forms of capital receipt.
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