CG73628 - Dwellings subject to ATED: computation of gains and losses: chargeable interests held on 5 April of the relevant year - examples
1.Asset held on 5 April 2013 and always within the scope of ATED
2.Asset held on 5 April 2015 and not within the scope of ATED until 1 April 2015
3.Asset held on 5 April 2016 and not within scope of ATED until 1 April 2016
Example 1. Asset held on 5 April 2013 and always within the scope of ATED
Basic information:
Residential property acquired April 2006 for £3,000,000 and disposed of April 2016 for £6,000,000.
The property had a value of £5,000,000 at 5 April 2013.
Estimated Indexation factors are: April 2006 to April 2013 0.3
April 2006 to April 2016 0.4
Total number of days chargeable to ATED (say) 700
Total days 6/4/2013 to disposal 1095
Stage 1
Disposal proceeds £6,000,000
Market value at 5 April 2013 £5,000,000
Notional post April 2013 gain £1,000,000
Stage 2
Days in relevant ownership period from April 2013 that are chargeable to ATED (CD) 700
Days in the relevant ownership period from 2013 to the date of disposal (TD) 1095
CD/TD x notional post April 2013 gain ((700/1095)) x £1,000,000) = £639,269
ATED related chargeable gain £639,269
on ATED-related gain before notional indexation (IA) (see stage 4) £360,731
Stage 3
Market value at 5 April 2013 £5,000,000
Allowable costs £3,000,000
Indexation (3,000,000 x 0.3) £900,000 £3,900,000
Notional pre April 2013 gain £1,100,000
Stage 4
Notional post April 2013 non ATED-related gain before IA (see stage 2) £360,731
Less notional IA (see below)
£252,512
Notional indexation
Indexation due on disposal disregarding Schedule 4ZZA
3,000,000 x 0.4 £1,200,000
Less
Indexation from stage 3 £900,000
£300,000
Apply factor (CD-TD)/TD
(1095-700)/(1095) x £300,000
Notional Indexation is £108,219
Stage 5
Stage 3 gain £1,100,000
Plus stage 4 gain £252,512
Non ATED-related gain £1,352,512
Example 2. Asset held on 5 April 2015 and not within the scope of ATED until 1 April 2015
Basic information:
Residential property acquired April 2010 for £800,000 and disposed of on 7 April 2016 for £1,400,000.
The property had a value of £1,200,000 at 5 April 2015.
Estimated Indexation factors are: April 2010 to april 2015 0.1
April 2010 to April 2016 0.11
Total number of days chargeable to ATED (assumed) 200
Total days 6 April 2015 to disposal (relevant ownership period) 365
Stage 1
Disposal proceeds £1,400,000
Market value at 5 April 2015 £1,200,000
Notional post April 2015 gain £200,000
Stage 2
Days in relevant ownership period from April 2015 that are chargeable to ATED (CD) 200
Days in the relevant ownership period from 2015 to the day preceding the date of disposal (TD) 365
CD/TD x notional post April 2015 gain ((200/365)) x £200,000) = £109,589
ATED related chargeable gain £109,589
on ATED-related gain before notional indexation (IA) (see stage 4) £90,411
Stage 3
Market value at 5 April 2015 £1,200,000
Allowable costs £800,000
Indexation (800,000 x 0.1) £80,000 £880,000
Notional pre April 2015 gain £320,000
Stage 4
Notional post April 2015 non ATED-related gain before IA (see stage 2) £90,411
Less notional IA (see below) £3,617
£86,794
Notional indexation
Indexation due on disposal disregarding Schedule 4ZZA
800,000 x 0.11 £88,000
Less
Indexation from stage 3 £80,000
£8,000
Apply factor (CD-TD)/TD
(365-200)/(365) x £8,000
Notional Indexation is £3,617
Stage 5
Stage 3 gain £320,000
Plus stage 4 gain £86,794
Non ATED-related gain £406,794
Example 3. Asset held on 5 April 2016 and not within scope of ATED until 1 April 2016
Basic information:
Residential property acquired April 2010 for £300,000 and disposed of 7 April 2018 for £700,000.
The property had a value of £550,000 at 5 April 2016.
Estimated Indexation factors are: April 2010 to April 2016 0.11
April 2010 tp April 2018 0.13
Total number of days chargeable to ATED (assumed) 200
Total days 6 April 2016 to day preceding disposal 730
Stage 1
Disposal proceeds £700,000
Market value at 5 April 2016 £550,000
Notional post April 2016 gain £150,000
Stage 2
Days in relevant ownership period from 6 April 2016 that are chargeable to ATED (CD) 200
Days in the relevant ownership period from 2016 to the day preceeding date of disposal (TD) 730
CD/TD x notional post April 2016 gain ((200/730)) x £150,000) = £41,095
ATED related chargeable gain £41,095
Non ATED-related gain before notional indexation (IA) (see stage 4) £108,905
Stage 3
Market value at 5 April 2016 £550,000
Allowable costs £300,000
Indexation (300,000 x 0.11) £33,000 £333,000
Notional pre April 2015 gain £217,00
Stage 4
Notional post April 2015 non ATED-related gain before IA (see stage 2) £108,905
Less notional IA (see below) £4,356
£104,549
Notional indexation:
Indexation due on disposal disregarding Schedule 4ZZA
300,000 x 0.13 £39,000
Less
Indexation from stage 3 £33,000
£6,000
Apply factor (CD-TD)/TD
(730-200)/(730) x £6,000
Notional Indexation is £4,356
Stage 5
Stage 3 gain £217,000
Plus stage 4 gain £104,549
Non ATED-related gain £321,549