CG73798 - Non-Resident Capital Gains Tax (NRCGT) – Disposals on or after 6 April 2015 to 5 April 2019: Individuals: Special rules, and computation: Cases where asset acquired after 5 April 2015, or election made for retrospective basis of computation, examples

1. Election made for retrospective basis of computation

2. Asset acquired after 5 April 2015

1. Election made for retrospective basis of computation

Basic information:

Interest acquired 6 April 2006 for £300,000 and disposed of 5 April 2017 for £280,000

Half of the building was used as a dwelling throughout the ownership period and the other half was used for a commercial purpose

Election made under Para 2(1)(b)

Total number of days in ownership period 4,017

Total numbers of days where the property was used wholly or partly as a dwelling 4,017

Calculating the NRCGT gain or loss

Step 1 – Gain or loss on disposal

Disposal proceeds £280,000

Allowable deductions £300,000

Loss on disposal £20,000

Step 2 – Relevant fraction of gain or loss

RD = 4,017

TD = 4,017

RD/TD x loss on disposal = £20,000

Step 3 – Apportionment for mixed use of building

This step is not necessary if there is no mixed use of the building.

As half of the building has been used as a dwelling, the appropriate fraction using a just and reasonable apportionment is 1/2. This is for illustrative purposes only – in a real situation establishing the appropriate fraction is likely to be more complex.

1/2 x relevant fraction of loss on disposal = £10,000

NRCGT loss £10,000

Calculating the gain or loss which is not an NRCGT gain or loss

Step 1

Not relevant is there is no NRCGT gain

Step 2

Loss on disposal (£20,000)

NRCGT loss (£10,000)

Loss remaining (£10,000)

Loss which is not an NRCGT loss (£10,000)

Summary

Total loss throughout ownership period £20,000

(Disposal proceeds of £280,000 less allowable deductions of £300,000)

Divided into:

NRCGT loss £10,000

Loss which is not an NRCGT loss £10,000

2. Asset acquired after 5 April 2015

Basic information:

Interest acquired 6 April 2016 for £200,000 and disposed of 5 April 2017 for £300,000

Wholly used as a dwelling throughout ownership period

Total number of days in ownership period 364

Total numbers of days where the property was used wholly or partly as a dwelling 364

Step 1 – Gain or loss on disposal

Disposal proceeds £300,000

Allowable deductions £200,000

Gain on disposal £100,000

Step 2 – Relevant fraction of gain or loss

RD = 364

TD = 364

RD/TD x gain on disposal = £100,000

Step 3

Not relevant as there is no mixed use

NRCGT gain £100,000

Calculating the gain or loss which is not an NRCGT gain or loss

Step 1

Gain on disposal £100,000

NRCGT gain £100,000

Gain remaining £0

Step 2

Not relevant is there is no NRCGT loss

Gain which is not an NRCGT gain £0

Summary

In this example the whole of the £100,000 gain is an NRCGT gain, as the property was used wholly as a dwelling throughout the ownership period, and the whole ownership period falls after 5 April 2015.