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HMRC internal manual

Capital Gains Manual

From
HM Revenue & Customs
Updated
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FA08/Sch7/para126(8) - relevant proportion is 0 - example

The facts are the same as that in example 22 year 2013-14 except for the 6 April 2008 value of the assets sold. This is £120,000.

The calculation is now:

  Held 6/4/08 Acquired after 6/4/08 Total
       
Gain £5,000 £15,000 £20,000
Disposal proceeds £70,000    
6/4/08 value £120,000    
Loss £50,000    

The section 2(2) amount calculated using 6 April 2008 values is £15,000 - £50,000. This is restricted to 0 as a section 2(2) amount cannot be negative. Beneficiary Z is not liable to Capital Gains Tax on any of the £10,000 2013-14 gain ie £10,000 × 0 = 0. Z remains liable to Capital Gains Tax on the section 87 gain matched to the 2012-13 section 2(2) amount. As in example 22 this is £694.

Z’s capital payments for 2009-10 are still reduced to nil.