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HMRC internal manual

Capital Gains Manual

Land: small part-disposals: example

Mrs J acquired a piece of land in April 1984 for £5,000. In May 1993 she disposed of a part of that land for £15,000 at a time when the whole land was worth £100,000. She made no other disposals in 1993-94.

Mrs J elected for TCGA92/S244 to apply.

Mrs J’s gain on the part-disposal in 1993-94 is computed as follows.

Consideration received £15,000
Section 244 election 5,000
(cost: Nil
Indexation £5,000 x 592 2,960
Chargeable gain £7,040

On a subsequent disposal or part-disposal of the remaining land, Mrs J will have no allowable expenditure under TCGA92/S38 (1)(a) to set against the consideration received (subject to CG71874 in rebasing cases).

NOTE. If a taxpayer is within the charge to Capital Gains Tax, neither indexation allowance nor taper relief apply to disposals of assets on or after 6 April 2008. Previously indexation allowance had been frozen at April 1998. Companies and other concerns within the charge to Corporation Tax are not affected by these changes. For indexation allowance see CG17207+ and for taper relief see CG17895+.