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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Rebasing to 31/3/82: examples

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