Commentary

C2.606 Part disposals

Capital gains tax
Capital gains tax | Commentary

C2.606 Part disposals

Capital gains tax | Commentary

C2.606 Part disposals

The provisions discussed in this article only apply to companies.

On a part disposal after 5 April 1988 of an asset owned at 31 March 1982, the normal part disposal rules apply for the purpose of computing the allowable expenditure referable to the part disposal1 and calculating the indexation allowance (if any)2. For corporation tax purposes3 the computation is subject to the restrictions relating to original cost and to certain no gain/no loss disposals (see C2.603). Note that indexation allowance for companies is frozen from 1 January 2018 so for disposals on or after this date the allowance is calculated up to December 2017, see C2.301.

Example 1

NC Ltd purchased land for £50,000 in 1979. At 31 March 1982, its value was £40,000. NC Ltd sold part of the land in January 2021 for £200,000, the remainder being valued at £175,000 at that time.

££
Disposal consideration200,000200,000
Deduct:(a) Cost
26,667
(b) 31.3.82 value
21,333
Unindexed gain173,333178,667
Deduct:Indexation allowance (see C2.302)
2.501 × £26,667
66,69466,694
Chargeable

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