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HMRC internal manual

Capital Gains Manual

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

Basic information:

Residential property acquired April 2014 for £4,000,000 and disposed of April 2020 for £6,000,000.

Estimated Indexation factor: April 2014 to April 2020 0.25
     
Total number of days chargeable to ATED 730  
Total days April 2014 to April 2020 2,190  

Stage 1

Disposal proceeds £6,000,000
   
Allowable deductions for CGT purposes £4,000,000
Gain on CGT rules £2,000,000

Stage 2

Days in period of ownership that are chargeable to ATED (CD) 730
   
   
Total days (TD) 2,190
   
CD/TD x gain on CGT rules ((730/2,190) x £2,000,000) = £666,667
   
ATED-related chargeable gain £666,667

Stage 3

Not required - gain under stage 2

Stage 4

Unadjusted gain from stage 1 above   £2,000,000
     
Less    
ATED related gain £666,667  
Notional indexation (see below) £666,667 £1,333,334
    £666,666
Non ATED-related gain   £666,666
     

Notional indexation:

Maximum indexation (£4,000,000 x 0.25) = £1,000,000

Relevant fraction: ((TD - CD) / TD) x indexation

((2190 - 730) / 2190) x £1,000,000) = £666,667