CG16740 - Rebasing to 31/3/82: examples

Example 1 - rebasing gives greater gain
Example 2 - rebasing gives greater loss
Example 3 - rebasing creates a loss
Example 4 - no gain or loss
Example 5 - disposal following no gain/no loss transfer
Example 6 - gain rolled over before 31 March 1982

Example 1 - rebasing gives greater gain

A company acquired an asset costing £8,000 on 1 March 1980. 31 March 1982 market value £7,000. Asset sold (at arm’s length) for £26,000 on 6 March 2013.

REBASED GAIN

-	-	-	£
-	Disposal proceeds	-	26,000
less	Cost (value at 31 March 1982)	-	7,000
-	Unindexed gain	-	19,000
Less	Indexation	8,000 x 2.131	17,048
-	Gain	-	1,952

GAIN ON OLD RULES

-	-	-	£
-	Disposal proceeds	-	26,000
less	Cost (1 March 1980)	-	8,000
-	Unindexed gain	-	18,000
Less	Indexation	8,000 x 2.131	17,048
-	Gain	-	952

Note: Indexation is based on the higher of relevant allowable expenditure before 31 March 1982 and 31 March 1982 value, see CG16732.

Chargeable gain = 952

Example 2 - rebasing gives greater loss

A company acquired an asset costing £14,000 on 6 April 1964. 31 March 1982 market value £20,000. Asset sold (at arm’s length) for £10,000 on 6 March 2013.

REBASED LOSS

-	-	-	£
-	Disposal proceeds	-	10,000
less	Cost (value at 31 March 1982)	-	20,000
-	Unindexed loss	-	(10,000)
Less	Indexation	20,000 x 2.131	42,620
-	Loss	-	(52,620)

LOSS ON OLD RULES (no rebasing election made)

-	-	-	£
-	Disposal proceeds	-	10,000
less	Cost (6 April 1964)	-	14,000
-	Unindexed loss	-	(4,000)
Less	Indexation	20,000 x 2.131	42,620
-	Loss	-	(46,620)
-	Time apportionment	£46,620 x 57 11/12 / 58 11/12=	(45,828)

Note: The loss to be compared with the rebased loss is the loss after time-apportionment. See also the note to Example 1 at CG16740 regarding indexation.

Allowable loss = (45,828)

Example 3 - rebasing creates a loss

A company purchased an asset costing £2,000 on 1 May 1967. 31 March 1982 market value £8,000. Asset sold (at arm’s length) for £24,000 on 6 March 2013.

REBASED LOSS

-	-	-	£
-	Disposal proceeds	-	24,000
less	Cost (value at 31 March 1982)	-	8,000
-	Unindexed gain	-	16,000
Less	Indexation	8,000 x 2.131	17,048
-	Loss	-	(1,048)

GAIN ON OLD RULES

-	-	-	£
-	Disposal proceeds	-	24,000
less	Cost (on 1 April 1967)	-	2,000
-	Unindexed gain	-	22,000
Less	Indexation	8,000 x 2.131	17,048
-	Gain	-	4,952

See the note to Example 1 at CG16740 regarding indexation.

As there is a rebased loss but a gain on the old rules, neither a gain nor a loss is deemed to arise.

Example 4 - no gain or loss

A company purchased an asset costing £2,000 on 1 May 1967. 31 March 1982 market value £8,000. Asset sold (at arm’s length) for £19,048 on 6 March 2013.

GAIN ON OLD RULES

-	-	-	£
-	Disposal proceeds	-	19,048
less	Cost (on 1 May 1967)	-	2,000
-	Unindexed gain	-	17,048
Less	Indexation	8,000 x 2.131	17,048
-	-	-	Nil

As neither a gain nor a loss arises on the old rules, neither a gain nor a loss is deemed to arise following rebasing.

Example 5 - disposal following no gain/no loss transfer

Asset cost £8,000 on 1 March 1980. 31 March 1982 market value £7,000. Asset sold to a company in same group for £16,000 on 6 April 1992.

These are the same dates and amounts as in CG16740. As a disposal between companies in the same group is is deemed to be at no gain/no loss, see CG45200+, then this is a specified no gain/no loss disposal, see CG16880.

The second company is to be treated as acquiring the asset for £13,976 (that is, cost £8,000 plus indexation allowance £5,976) and rebasing will apply on any subsequent disposal of the asset by her.

Example 6 - gain rolled over before 31 March 1982

Asset A was sold in 1980 for £1,000 realising a gain of £500.

A company acquired asset B in 1981 for £2,000 and a CGTA79/S115 (now TCGA92/S152) roll-over relief claim was made reducing its cost for CGT purposes to £1,500.

Asset B was sold in March 2013 for £15,000 The market value of asset B at 31 March 1982 was £3,000.

REBASED GAIN

-	-	-	£
-	Disposal proceeds	-	15,000
less	Cost (market value at 31 March 1982)	-	3,000
-	Unindexed gain	-	12,000
Less	Indexation	3,000 x 2.131	6,393
-	Gain	-	5,607

Note: No adjustment is made to the 31 March 1982 market value of asset B for the gain on asset A which was rolled over before 31 March 1982 against the acquisition cost of asset B.

GAIN ON OLD RULES

-	-	-	£
-	Disposal proceeds	-	15,000
less	Cost 1981	2,000	-
-	Deduct gain on asset A rolled over	500	1,500
-	Unindexed gain	-	13,500
less	Indexation	3,000 x 2.131	6,393
-	Gain	-	6,657
-	Chargeable gain	-	5,607