LLM8060 - Capital gains: Names: syndicate capacity: disposals: computation of gain or loss
Example of disposal of bespoke capacity
Name A pays £2,500 for £50,000 allocated capacity in syndicate X for the 2001 underwriting account. Syndicate X increases its stamp by 10% for the 2002 underwritingaccount. Name A also purchases an additional £11,000 capacity for £800 in the 2003 auctions. The following year he sells one third of his syndicate X capacity for £2,000. The computation of the capital gain before indexation will be as follows
| Disposal proceeds | - | - | - | £2,000 |
| Cost of acquisition | - | - | - | - |
| - | £50,000 | 2001 capacity | £2,500 | - |
| - | £5,000 | 10% 2002 expansion | £0 | - |
| - | £11,000 | 2003 auction (enhancement) | £800 | - |
| Totals | £66,000 | - | £3,300 | - |
| Apportioned cost of 1/3 | - | - | £1,100 | (£1,100) |
| Auction costs (say) | - | - | - | (£50) |
| Gain | - | - | - | £850 |
The allowable cost of the remaining capacity is £2,200. In 2005, Name A pays £1,200 fora further £20,000 capacity in syndicate X. This is treated as enhancement expenditure. In2007, Name A sells all of the syndicate capacity for £6,000.
| Disposal proceeds | - | - | - | £6,000 |
| Cost of acquisition | - | - | - | - |
| - | £44,000 | b/f (see above) | £2,200 | - |
| - | £20,000 | 2005 auction (enhancement) | £1,200 | - |
| - | £64,000 | - | £3,400 | (£3,400) |
| Auction costs (say) | - | - | - | (£100) |
| Gain | - | - | - | £2,500 |