CG17481 - Indexation: example: part-disposal

1 June 1982 Y acquires office premises for £100,000.

1 June 1985 premises improved by spending £25,000 on car parking and an entrance.

1 June 1988 part of premises sold for £45,000, the part retained is worth £180,000.

1 June 1990 rest of premises sold for £160,000.

FIRST DISPOSAL

The part-disposal formula, see CG12731, gives

• 45,000 divided by (180,000 plus 45,000)

This is 1/5

-	-	-	£
-	Disposal proceeds	-	45,000
Less	Proportion of cost	1/5 of 100,000 20,000	-
-	-	1/5 of 25,000 5,000	25,000
-	Unindexed gain	-	20,000
Less	Indexation	20,000 at 0.302 6,040	-
-	-	5,000 at 0.117 585	-
-	INDEXED GAIN	-	13,375
The residual expenditure	-	80,000 on 1 June 1982	-
-	-	20,000 on 1 June 1985	-

SECOND DISPOSAL

-	-		-	£
-	Disposal proceeds	-	-	160,000
Less	Cost (residual expenditure)	-	80,000	-
-	-	-	20,000	100,000
-	Unindexed gain	-	-	60,000
Less	Indexation	80,000 at 0.548	43,840	-
-	-	20,000 at 0.328	6,560	50,400
-	INDEXED GAIN	-	-	9,600