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HMRC internal manual

Capital Gains Manual

Capital Gains Manual: Introduction and computation: occassions of charge: Part-disposals: indexation allowance: restriction of losses – capital allowances: composite acquisition

TCGA92/S56 (1), TCGA92/S41 and TCGA92/S52(4)

Indexation allowance

TCGA92/S56 (1) provides that the apportionment of the cost on a part-disposal is to be made before the indexation allowance is computed, see CG17352.  

Since 2008 indexation allowance applies only for the purposes of corporation tax. (CG17207).

Restriction of losses: capital allowances – TCGA92/S41

In the case of an asset subject to capital allowances, the apportionment under CG12731 should be made first and capital allowances taken into account only to the extent that they relate to the part being disposed of.

If there has been a previous part- disposal at a loss and on that disposal capital allowances have been used to restrict the allowable loss, then only the balance of the capital allowances should be used to restrict any further loss on the disposal of the asset in full or in part, see CG15400+.

Composite acquisition – TCGA92/S52(4)

Where the asset disposed of was obtained with other assets as part of a composite acquisition (for example, a single contract of purchase at an inclusive price embracing more than one asset), the acquisition price should be apportioned to the respective assets broadly by reference to their market values at the date of acquisition. But where

  • a part-disposal of a holding of shares follows the reorganisation or reduction of a company’s share capital, see CG51890+, or
  • land is acquired by inheritance or gift, see CG71804, or
  • a business is transferred as a going concern, see CG68050.

If agreement of the apportionment cannot be reached, and one or more of the assets is land in the UK, the assistance of the Valuation Office should be sought, see CG74000+.