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.