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HMRC internal manual

Capital Gains Manual

From
HM Revenue & Customs
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Insurance agents: computations under agreed procedure

You start with the allowable expenditure on the `book’ at the start of the year, or at the date of acquisition.

Add together the capital sums received or receivable for the year and deduct all capital sums paid in the year.

  • If capital payments exceed receipts (in other words, additions to goodwill exceed disposals), add the net capital payment to the balance of allowable expenditure.If the capital receipts exceed capital payments, compare the net capital receipts with the balance of allowable expenditure at the start of the year, or at the date of acquisition if later:

  • If the net capital receipts are 5 per cent or less of the balance of allowable expenditure (a `small’ disposal), you may simply deduct them from the balance of allowable expenditure. However, if the agent so requests, the part-disposal rules should be applied.
  • If the net capital receipts are more than 5 per cent of the balance of allowable expenditure (a `large’ disposal), you should apply the part-disposal rules, see CG12730+, as if there were a single disposal of that amount in the year.