CG39195 | Re-acquisition cost of assets

If the deemed disposal and reacquisition is of only a proportion of the remaining chargeable assets the base cost of those assets will be made-up of two elements:

• an element representing the deemed disposal and reacquisition

• an element representing the remaining original cost.

Suppose an asset cost £6,000 and the trustees are treated as disposing of 2/3 rds of the asset. If the asset has a market value of £13, 500 the deemed disposal and reacquisition gives a gain of £5,000 (£9,000 - £4,000). The remaining part of the original cost is £2,000 (£6,000 - £4,000).

The base cost of the reacquired asset is £11,000 made up of two elements:

• £9,000 - the market value of the part disposed of

• £2,000 - the remaining part of the original cost.