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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: para 5 election applies

In most cases it will not benefit the taxpayer to make an election under TCGA92/SCH4ZZA paragraph 5 for the ‘rebasing’ of the gain chargeable to CGT not to apply.

The most likely circumstance where an election is favourable is where the market value of the taxpayer’s interest in the dwelling at 5 April of the relevant year is greater than the value of the interest at the time of disposal.

An election under paragraph 5 must be made in the taxpayer’s ATED-related CGT return (not in their corporation tax return, where the taxpayer is a company within the charge to CT), or in an amendment to the return, of their ATED-related gain or loss. An election applies only to the single-dwelling interest in respect of which it is made, and the taxpayer may choose whether or not to make an election in respect of any other single-dwelling interest it holds.

An election must be made in the return for the first relevant high value disposal (i.e in 2013-14 or later) of the interest in question or any part of that interest. The election is irrevocable and applies to all later disposals of the taxpayer’s interest where the first disposal is a part disposal.

The rules for computing gains and losses where an election is made are set out below:

Where a person makes an election under paragraph 5 of Schedule 4ZZA in relation to a disposal, or has made one in respect of an earlier disposal of the chargeable interest in question, the ‘rebasing’ outlined in CG73626 does not apply. Instead the computational steps are as set out in CG73632, with a couple of modifications to CD and TD—

  • CD is the total days from the date of acquisition or, if later, 31 March 1982 to the day before the date of disposal which were days chargeable to ATED from 1 April of the relevant year onwards or, for days before 1 April of the relevant year, were days that would have been chargeable to ATED if ATED had been in place at that time (notional ATED days).
  • TD is the total number of days from the date of acquisition or, if later, 31 March 1982 to the day before the date of disposal.