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Capital Gains Manual

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HM Revenue & Customs
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Dwellings subject to ATED: computation of gains and losses: chargeable interests held on 5 April 2013 - example

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
  April 2013 to April 2016 0.1
Total number of days chargeable to ATED 700
   
Total days 6/4/2013 to disposal 1095

Stage 1

Disposal proceeds £6,000,000
   
Market value at 6 April 2013 £5,000,000
Notional post April 2013 gain £1,000,000

Stage 2

Days in period of ownership from April 2013 that are chargeable to ATED (CD) 700
   
   
Days in the relevant period of ownership 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 6 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