Commentary

C2.402 Allowable expenditure on a part disposal

Capital gains tax
Capital gains tax | Commentary

C2.402 Allowable expenditure on a part disposal

Capital gains tax | Commentary

C2.402 Allowable expenditure on a part disposal

Where there is a part disposal, the general rule for computing the gain is that there is set against the consideration received the cost of what has been disposed of. The cost of what has been disposed of is calculated by apportionment of the cost of the whole asset, and this is done as follows:

Where:

  1.  

    (A)     is the amount or value of the consideration for the disposal, and

  2.  

    (B)     is the market value of the property which remains undisposed of

then the fraction of the expenditure which is allowable as a deduction in computing the amount of the gain accruing on the disposal is:

The remainder is attributed to the property which remains undisposed of1.

Example 1

An asset was bought in May 2006 by DA Ltd at a total cost of £30,000. In November 2020 a part of the asset was sold for £12,000, at which date the market value of the asset

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