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HMRC internal manual

Capital Gains Manual

From
HM Revenue & Customs
Updated
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Re-acquisition cost of assets

If the deemed disposal and reacquisition is of only a proportion of the remaining chargeable assets the base cost of those assets will be made-up of two elements:

  • an element representing the deemed disposal and reacquisition
  • an element representing the remaining original cost.

Suppose an asset cost £6,000 and the trustees are treated as disposing of 2/3 rds of the asset. If the asset has a market value of £13, 500 the deemed disposal and reacquisition gives a gain of £5,000 (£9,000 - £4,000). The remaining part of the original cost is £2,000 (£6,000 - £4,000).

The base cost of the reacquired asset is £11,000 made up of two elements:

  • £9,000 - the market value of the part disposed of
  • £2,000 - the remaining part of the original cost.