CG73857 - Non-Resident Capital Gains Tax (NRCGT) – Disposals on or after 6 April 2015 to 5 April 2019: Companies: Special rules: Computations involving companies, example

Basic information:

Interest acquired 6 April 2010 for £300,000 and disposed of 5 April 2017 for £410,000

Wholly used (or suitable for use) as a dwelling throughout ownership period

Market value at 5 April 2015 £370,000

No election made under Para 2(1)

Total number of days within post-commencement ownership period 730

Total number of days within that period where the property was used wholly or partly as a dwelling 730

Indexation factor April 2010 to April 2015 0.158

Indexation factor April 2015 to April 2017 (say) 0.023

Calculating the NRCGT gain or loss

Stage 1

Notional post-April 2015 gain or loss

Disposal proceeds £410,000

Market Value of 5 April 2015 £370,000

Indexation allowance (370,000 x 0.023) £8,510

Notional post-April 2015 gain £31,490

Stage 2

RD = 730

TD = 730

RD/TD x Notional post April 2015 gain = £31,490

NRCGT gain £31,490

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

The part of the gain which is not an NRCGT gain will not be subject to charge unless it is brought into charge by other provisions. This second part of the computation may not be necessary for many companies.

Step 1

Determine the amount of the notional pre-April 2015 gain or loss

Market Value at 5 April 2015 £370,000

Allowable deductions

Acquisition cost £300,000

Indexation allowance (300,000 x 0.158) £47,400

Notional pre-April 2015 gain £22,600

Step 2

Determine the amount of the post-April 2015 gain remaining after the deduction of the NRCGT gain

Notional post-April 2015 gain £31,490

NRCGT gain £31,490

£0

Step 3

Not relevant as there is no post-April 2015 loss

Step 4

Add Step 1 to Step 2

Step 1 £22,600

Step 2 £0

Gain which is not an NRCGT gain £22,600

Summary

Total gain throughout ownership period £54,090

(Disposal proceeds of £410,000 less allowable deductions of £300,000 makes pre-indexation gain of £110,000, less total indexation allowance of 55,910)

Divided into:

NRCGT gain £31,490

Gain which is not an NRCGT gain £22,600

Therefore the only difference between the computation for companies and the computation for other persons is that companies are entitled to indexation allowance. This is also the case where the company makes an election for a different method of computation. However, if the gain may also be subject to ATED-related CGT, then the computation method is different – see CG73860+.