Commentary

C1.105 Computation of chargeable gains and allowable losses

Capital gains tax
Capital gains tax | Commentary

C1.105 Computation of chargeable gains and allowable losses

Capital gains tax | Commentary

C1.105 Computation of chargeable gains and allowable losses

For a gain or loss to be within the scope of tax on chargeable gains, there must be a chargeable disposal of a chargeable asset by a chargeable person. See C1.104, C1.103 and C1.102 respectively.

Individuals, trustees and personal representatives are subject to capital gains tax on chargeable gains. Companies are subject to corporation tax on chargeable gains. See C1.102.

This article discusses the computation of chargeable gains and losses. For the rates of tax that apply to chargeable gains, see C1.107.

Computation of chargeable gains and allowable losses

The amount of any gains accruing on the chargeable disposal of chargeable assets are calculated in accordance with the rules laid down in TCGA 1992, Pt II. These are modified by other provisions of that Act and the rules relating to indexation allowance (where applicable, see Division C2.3).1

In general, allowable losses are computed in the same way as chargeable gains, except where there is express provision to the contrary2. The computation of chargeable gains and losses is discussed in detail in Part C2. For an overview of allowable losses, see C1.106.

The starting point in calculating gains is the deduction of the allowable expenditure incurred on an asset (commonly referred to as its 'base cost') from the consideration received on its disposal (although see 'No gain/no loss transactions' below). Each of these terms is discussed below. Where the asset was acquired before 31 March 1982, the acquisition cost is the market value as at that date (see

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