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HMRC internal manual

Lloyd's Manual

From
HM Revenue & Customs
Updated
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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 2001underwriting 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 2003auctions. 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    
£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