CG73636 - CG73636 - Dwellings subject to ATED: computation of gains and losses: Cases 3, 2, or 1 apply
With the changes to the threshold amount and the introduction of NRCGT (see CG73700+) in FA2015 additional computational rules were required.
The objective is to compute ATED related gains by reference to the period for which the asset in question was in principle within the scope of ATED. The lowest valuation capable of giving rise to an ATED charge fell from £2m to £1m on 1 April 2015 and from £1m to £500,000 on 1 April 2016. Thus the CGT computation must accommodate several scenarios, including properties held continually since before April 2013 but only coming within the scope of ATED in April 2015 or April 2016, as well as, exceptionally, properties within the scope of ATED for a period but which cease to be within the scope before disposal (as distinct from properties which remain in scope but which become eligible for relief.
Schedule 4ZZA deals with this by defining three ’Cases’ by reference to when a single dwelling interest concerned with the disposal was first liable to ATED. Once the relevant Case (if any) has been identified, the appropriate threshold amount follow and the computational machinery in the Schedule can be applied correctly.
The conditions for Case 3 are considered first. If the case does not fall within Case 3 then Case 2 is considered. If the case falls within neither Case 3 nor Case 2 then Case 1 is considered.
Case3 is that –
the interest disposed was held on 5 April 2016 and
no relevant single dwelling interest was subject to ATED on one or more days in the period ending with 31 March 2016 during which the interest disposed of was held
A single dwelling interest is subject to ATED on a day if it was within the scope of the charge to ATED in respect of that day or would have been within that charge but for the day being relievable by virtue of the provisions in s132 FA2013.
Example
A day that would be relievable under s133 FA2013 (for a property rental business) would be a day subject to ATED.
Case2 is that –
the interest disposed was held on 5 April 2015 and
case 3 does not apply and
no relevant single dwelling interest was subject to ATED on one or more days in the period ending with 31 March 2015 during which the interest disposed of was held
Case 1 is that –
the interest disposed was held on 5 April 2013 and
neither Case 2 nor Case 3 applies
If the case falls within none of these Cases then the rules in para 6 Schedule 4ZZA apply.