CG73964 - NRCG and the exemptions: Disposals from 6 April 2019: Computational rules for CGT from 6 April 2019: CGT – Computation - Direct disposals of assets partly chargeable before 6 April 2019

TCGA1992\Sch4AA paras 12 to 17

In calculating the gain on the actual disposal, it is assumed that the asset was sold and immediately reacquired at its market value on 5 April 2015 (but only if it was acquired on or before 5 April 2015) and in addition it is assumed that the asset was sold and immediately reacquired at its market value on 5 April 2019.

For the assumed sale on 5 April 2019 the gain or loss is treated as accruing on the actual disposal in addition to the gain or loss that actually accrues on the actual disposal.

Example

A building was acquired in the 1990’s and comprises of a shop with a flat above. The building is disposed of in say June 2021 for £380,000. The shop represented half of the building throughout.

MV at 5 April 2015 £300,000

MV at 5 April 2019 £350,000

Gain on assumed sale 5/4/19 £25,000 (£350,000 - £300,000)/2 (see CG73924)

Gain on actual June 2021 disposal £30,000 (£380,000 - £350,000)

Total gain accruing June 2021 £55,000

An election can be made for this rebasing not to apply and for a retrospective basis (para 14) to apply.

Where an election under para 14 for the retrospective basis to apply is made, rebasing to 5 April 2015 and 5 April 2019 is ignored and the gain or loss is calculated with the original acquisition cost (or rebasing to 31/3/82 if relevant).

In individual cases it may sometimes be difficult to decide whether any particular part of a building should be looked at independently from other parts, or whether the building should be looked at as a whole. Such cases should be decided on their facts.

If the actual disposal is of an interest in land subsisting under a contract for the acquisition of land consisted of or included a building to be constructed or adapted for use as a dwelling the disposal, the land is taken to consist of or include a dwelling throughout the April 2015 to April 2019 ownership period.