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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Dwellings subject to ATED: computation of gains and losses: chargeable interests acquired after 5 April 2013

The computational stages for disposals of single-dwelling interests acquired on or after 6 April 2013 are as follows:

  1. Compute the gain or loss on the disposal under normal capital gains tax rules, (so indexation is not available). Where a company makes the disposal to another company in the same group TCGA1992/S171(2)(ba) prevents the disposal being treated as made at no gain/no loss value and the market value rule applies instead.
  2. Split the gain/loss under (1) above into the part that is ATED-related and the part (if any) that is not.
The ATED-related part is the fraction of gain/loss given by the formula CD/TD. CD = the days in the period from the date of acquisition to the date of disposal that are chargeable to ATED. TD = the total number of days in that period.  

Where CD subsequently changes because a claim to relief from ATED has been made or altered, TCGA92/Sch4ZZA, para 7 permits all necessary adjustments to the capital gains computations.  
  1. If there is a loss under (2) above and a part of it is not ATED-related, that part is the non ATED-related loss on the disposal.
  2. If there is a gain under (2) above and a part of it is not ATED-related, that part is reduced by a fraction of the indexation allowance (IA) that would have been due disregarding Schedule 4ZZA. The fraction is (TD - CD)/TD. CD and TD are as at (2) above.