CG17481 | Indexation: example: part-disposal
From HM Revenue & Customs · Capital Gains Manual
1 June 1982 Y acquires office premises for £100,000.
1 June 1985 premises improved by spending £25,000 on car parking and an entrance.
1 June 1988 part of premises sold for £45,000, the part retained is worth £180,000.
1 June 1990 rest of premises sold for £160,000.
FIRST DISPOSAL
The part-disposal formula, see CG12731, gives
45,000 divided by (180,000 plus 45,000)
This is 1/5
| - | - | - | £ |
|---|---|---|---|
| - | Disposal proceeds | - | 45,000 |
| Less | Proportion of cost | 1/5 of 100,000 20,000 | - |
| - | - | 1/5 of 25,000 5,000 | 25,000 |
| - | Unindexed gain | - | 20,000 |
| Less | Indexation | 20,000 at 0.302 6,040 | - |
| - | - | 5,000 at 0.117 585 | - |
| - | INDEXED GAIN | - | 13,375 |
| The residual expenditure | - | 80,000 on 1 June 1982 | - |
| - | - | 20,000 on 1 June 1985 | - |
SECOND DISPOSAL
| - | - | - | £ | |
|---|---|---|---|---|
| - | Disposal proceeds | - | - | 160,000 |
| Less | Cost (residual expenditure) | - | 80,000 | - |
| - | - | - | 20,000 | 100,000 |
| - | Unindexed gain | - | - | 60,000 |
| Less | Indexation | 80,000 at 0.548 | 43,840 | - |
| - | - | 20,000 at 0.328 | 6,560 | 50,400 |
| - | INDEXED GAIN | - | - | 9,600 |