CG38870 | FA08/Sch7/para126(8) - relevant proportion is 0 - example
From HM Revenue & Customs · Capital Gains Manual
The facts are the same as that in example 22 year 2013-14 except for the 6 April 2008 value of the assets sold. This is £120,000.
The calculation is now:
| - | Held 06/04/2008 | Acquired after 06/04/2008 | Total |
|---|---|---|---|
| Gain | £5,000 | £15,000 | £20,000 |
| Disposal proceeds | £70,000 | - | - |
| 06/04/2008 value | £120,000 | - | - |
| Loss | £50,000 | - | - |
The section 2(2) amount calculated using 6 April 2008 values is £15,000 - £50,000. This is restricted to 0 as a section 2(2) amount cannot be negative. Beneficiary Z is not liable to Capital Gains Tax on any of the £10,000 2013-14 gain ie £10,000 × 0 = 0. Z remains liable to Capital Gains Tax on the section 87 gain matched to the 2012-13 section 2(2) amount. As in example 22 this is £694.
Z’s capital payments for 2009-10 are still reduced to nil.