CG69118 | Insurance agents: example
From HM Revenue & Customs · Capital Gains Manual
This example illustrates how the agreed procedure worked before the introduction of indexation allowance and rebasing. Accumulated allowable expenditure at end of year 1 is £1,500
| Year | Payments | Receipts | Difference |
|---|---|---|---|
| In year 2 | 335 | 175 | 160 |
| In year 3 | 80 | 140 | -60 |
| In year 4 | 100 | 400 | -300 |
Allowable expenditure brought forward from year 1 £1,500
Year 2 Payments exceed receipts Add net payments to balance of expenditure £160
Total £1,660
Year 3 Net receipts £60 are less than 5% of £1,660 ‘small disposal: £60
deduct from balance
Total £1,600
Year 4 Net receipts £300 exceed 5% of £1,600 ‘large’ disposal:
part-disposal computation needed Value of ‘book’ at end of year 4
is agreed at £2,100 ( this reflects new business obtained by agent)
Net disposal consideration £300
Less £1,600 x £300 £200 £200
£300 + £2,100
Chargeable gain £100
Allowable expenditure carried forward £1,400