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HMRC internal manual

Capital Gains Manual

From
HM Revenue & Customs
Updated
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Assets held on 6/4/65: part-disposals after 5/4/65: example

TCGA92/SCH2/PARA16 (8)

  £
   
On 6 April 1960 X acquires a chargeable asset for 20000
On 6 April 1970 X disposes of an interest in it for 6000
The market value of the remainder is estimated at 24000
The market value at 31 March 1982 is 30000
On 6 April 1990 X disposes of the remainder for 100000

Assume that all these amounts are net of expenses.

PART-DISPOSAL ON 6 APRIL 1970

        £
         
  Disposal proceeds     6000
Less   6000    
  Apportioned cost 6,000 + 24,000 x £20,000 = 4000
    Gain   2000
      5  
    Chargeable gain 10 x £2,000 = 1000

FINAL DISPOSAL ON 6 APRIL 1990Allowable expenditure on part retained after part-disposal

£20,000 - £4,000 = £16,000
         

Computation of entire gain on old basis over period of ownership

        £
         
  Disposal proceeds     100000
Less Balance of cost     16000
    Unindexed gain   84000
Less Indexation   30,000 x 0.575 17250
    Gain   66750

Computation of gain from 6 April 1960 to 6 April 1970

  Market value at date of part-disposal   24000
       
Less Cost   16000
    Gain 8000

Proportion of gain 6 April 1965 to 6 April 1970

5        
         
10 x £8,000 = £4,000

Balance of gain from 6 April 1970 to 6 April 1990

= entire gain - gain over period to part-disposal
   
= £66,750 - £8,000
= £58,750.

The chargeable gain on the old basis

= proportion of gain 6 April 1965 to 6 April 1970
   
+ balance of gain from 6 April 1970 to 6 April 1990
= £4,000 + £58,750
= £62,750.

The final step in the computation would be to make the comparison with the rebased gain, see CG16730+.