beta This part of GOV.UK is being rebuilt – find out what beta means

HMRC internal manual

Capital Gains Manual

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

 

 

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
Non 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) £108,219
  £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

 

1.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
Non 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

 

 

2.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 to 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   £ 217,000

 

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