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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Assets held on 6/4/65: part-disposal before 6/4/65

TCGA92/SCH2/PARA16 (7)

Where there was a part-disposal before 6 April 1965 the gain accruing on the part-disposal was not a chargeable gain because Capital Gains Tax was only introduced from 6 April 1965. Therefore we have to ascertain the historic cost of the part retained in accordance with CG15520. In order to determine the cost of the part retained we apply the original version of TCGA92/S42 (2)(b) (which is essentially the same as the current version, see CG12730+). For computational purposes the value of the part of the asset which remained undisposed of after the first disposal should be deemed to have been acquired at the date of that disposal at market value. (In the example in CG12731 the deemed acquisition cost would be £30,000 at the date of the part-disposal.) This provides a more accurate indication of the gain since 6 April 1965 than the time-apportionment formula applied from the date of original acquisition. Where the part-disposal before 6 April 1965 was `small’, see CG12820+, CG57835+ and CG71870+, the received may be treated as a deduction from the cost of the asset and, consequently, valuation of the remainder of the asset at the time of the part-disposal is not required. In such a case, when the next part-disposal of the asset takes place, the time-apportionment formula can be applied from the date of the original acquisition of the asset.