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HMRC internal manual

Capital Gains Manual

Rebasing for companies: halving relief for deferred gains pre-31/3/82: example

Farmland cost £5,000 on 1 September 1978.

Farmland sold for £15,000 on 1 June 1984.

Replacement farmland cost £24,000 on 1 March 1987.

Replacement farmland sold for £100,000 on 6 March 2013.

1984 Disposal

      £
       
  Disposal proceeds   15,000
less Cost   5,000
  Unindexed gain   10,000
less Indexation 5,000 x 0.123 605
  Gain   9,385

Roll-over relief under CGTA79/S115 was claimed in respect of the 1984-85 capital gain so the allowable cost of replacement land becomes

£24,000 - £9,385 = £14,615 (CGTA79/S115 (1)(b)).

2013 Disposal

Relief under TCGA92/SCH4 is claimed: the reduction in the cost by £9,385 is made under one of the specified enactments and so this is reduced by 50% to £4,692 by Paragraph 1(a). The gain that arises in March 2013 is

        £
         
  Disposal proceeds     100,000
less Cost (after roll-over relief)   14,615  
  Schedule 4 relief (50% of 9,385)   4,693 19,308
  Unindexed gain   30,692  
less Indexation 19,308 x 1.472   28,421
  Gain     52,271