CG73628 - Dwellings subject to ATED: computation of gains and losses: chargeable interests held on 5 April of the relevant year - examples

1.Asset held on 5 April 2013 and always within the scope of ATED

2.Asset held on 5 April 2015 and not within the scope of ATED until 1 April 2015

3.Asset held on 5 April 2016 and not within scope of ATED until 1 April 2016

Example 1. Asset held on 5 April 2013 and always within the scope of ATED

Basic information:

Residential property acquired April 2006 for £3,000,000 and disposed of April 2016 for £6,000,000.

The property had a value of £5,000,000 at 5 April 2013.

Estimated Indexation factors are: April 2006 to April 2013 0.3

April 2006 to April 2016 0.4

Total number of days chargeable to ATED (say) 700

Total days 6/4/2013 to disposal 1095

Stage 1

Disposal proceeds £6,000,000

Market value at 5 April 2013 £5,000,000

Notional post April 2013 gain £1,000,000

Stage 2

Days in relevant ownership period from April 2013 that are chargeable to ATED (CD) 700

Days in the relevant ownership period from 2013 to the date of disposal (TD) 1095

CD/TD x notional post April 2013 gain ((700/1095)) x £1,000,000) = £639,269

ATED related chargeable gain £639,269

on ATED-related gain before notional indexation (IA) (see stage 4) £360,731

Stage 3

Market value at 5 April 2013 £5,000,000

Allowable costs £3,000,000

Indexation (3,000,000 x 0.3) £900,000 £3,900,000

Notional pre April 2013 gain £1,100,000

Stage 4

Notional post April 2013 non ATED-related gain before IA (see stage 2) £360,731

Less notional IA (see below)

£252,512

Notional indexation

Indexation due on disposal disregarding Schedule 4ZZA

3,000,000 x 0.4 £1,200,000

Less

Indexation from stage 3 £900,000

£300,000

Apply factor (CD-TD)/TD

(1095-700)/(1095) x £300,000

Notional Indexation is £108,219

Stage 5

Stage 3 gain £1,100,000

Plus stage 4 gain £252,512

Non ATED-related gain £1,352,512

Example 2. Asset held on 5 April 2015 and not within the scope of ATED until 1 April 2015

Basic information:

Residential property acquired April 2010 for £800,000 and disposed of on 7 April 2016 for £1,400,000.

The property had a value of £1,200,000 at 5 April 2015.

Estimated Indexation factors are: April 2010 to april 2015 0.1

April 2010 to April 2016 0.11

Total number of days chargeable to ATED (assumed) 200

Total days 6 April 2015 to disposal (relevant ownership period) 365

Stage 1

Disposal proceeds £1,400,000

Market value at 5 April 2015 £1,200,000

Notional post April 2015 gain £200,000

Stage 2

Days in relevant ownership period from April 2015 that are chargeable to ATED (CD) 200

Days in the relevant ownership period from 2015 to the day preceding the date of disposal (TD) 365

CD/TD x notional post April 2015 gain ((200/365)) x £200,000) = £109,589

ATED related chargeable gain £109,589

on ATED-related gain before notional indexation (IA) (see stage 4) £90,411

Stage 3

Market value at 5 April 2015 £1,200,000

Allowable costs £800,000

Indexation (800,000 x 0.1) £80,000 £880,000

Notional pre April 2015 gain £320,000

Stage 4

Notional post April 2015 non ATED-related gain before IA (see stage 2) £90,411

Less notional IA (see below) £3,617

£86,794

Notional indexation

Indexation due on disposal disregarding Schedule 4ZZA

800,000 x 0.11 £88,000

Less

Indexation from stage 3 £80,000

£8,000

Apply factor (CD-TD)/TD

(365-200)/(365) x £8,000

Notional Indexation is £3,617

Stage 5

Stage 3 gain £320,000

Plus stage 4 gain £86,794

Non ATED-related gain £406,794

Example 3. Asset held on 5 April 2016 and not within scope of ATED until 1 April 2016

Basic information:

Residential property acquired April 2010 for £300,000 and disposed of 7 April 2018 for £700,000.

The property had a value of £550,000 at 5 April 2016.

Estimated Indexation factors are: April 2010 to April 2016 0.11

April 2010 tp April 2018 0.13

Total number of days chargeable to ATED (assumed) 200

Total days 6 April 2016 to day preceding disposal 730

Stage 1

Disposal proceeds £700,000

Market value at 5 April 2016 £550,000

Notional post April 2016 gain £150,000

Stage 2

Days in relevant ownership period from 6 April 2016 that are chargeable to ATED (CD) 200

Days in the relevant ownership period from 2016 to the day preceeding date of disposal (TD) 730

CD/TD x notional post April 2016 gain ((200/730)) x £150,000) = £41,095

ATED related chargeable gain £41,095

Non ATED-related gain before notional indexation (IA) (see stage 4) £108,905

Stage 3

Market value at 5 April 2016 £550,000

Allowable costs £300,000

Indexation (300,000 x 0.11) £33,000 £333,000

Notional pre April 2015 gain £217,00

Stage 4

Notional post April 2015 non ATED-related gain before IA (see stage 2) £108,905

Less notional IA (see below) £4,356

£104,549

Notional indexation:

Indexation due on disposal disregarding Schedule 4ZZA

300,000 x 0.13 £39,000

Less

Indexation from stage 3 £33,000

£6,000

Apply factor (CD-TD)/TD

(730-200)/(730) x £6,000

Notional Indexation is £4,356

Stage 5

Stage 3 gain £217,000

Plus stage 4 gain £104,549

Non ATED-related gain £321,549