SolvedCG73634 | Dwellings subject to ATED: computation of gains and losses: chargeable interests acquired after 5 April of the relevant year - examples
From HM Revenue & Customs · Capital Gains Manual
1.Acquisition in April 2014 for £4,000,000
2.Acquisition in October 2015 for £1,500,000
1.Acquisition in April 2014 for £4,000,000
Basic information:
Residential property acquired April 2014 for £4,000,000 and disposed of April 2018 for £6,000,000.
| Estimated Indexation factor | Year |
|---|---|
| 0.25 | April 2014 to April 2018 |
| Total number of days chargeable to ATED | 730 |
| Total days April 2014 to April 2018 | 1,460 |
Stage 1
| Disposal proceeds | Amount |
|---|---|
| - | £6,000,000 |
| Allowable deductions for CGT purposes | £4,000,000 |
| Gain on CGT rules | £2,000,000 |
Stage 2
Days in period of ownership that are chargeable to ATED (CD) 730
Total days (TD) 1,460
CD/TD x gain on CGT rules ((730/1,460) x £2,000,000) = £1,000,000
ATED-related chargeable gain £1,000,000
Stage 3
Not required - gain under stage 2
Stage 4
Unadjusted gain from stage 1 above £2,000,000
Less
ATED related gain £1,000,000
Notional indexation (see below) £500,000 £1,500,000
£500,000
Non ATED-related gain £500,000
Notional indexation:
Maximum indexation (£4,000,000 x 0.25) = £1,000,000
Relevant fraction: ((TD - CD) / TD) x indexation
((1460 - 730) / 1460) x £1,000,000) = £500,000
2.Acquisition in October 2015 for £1,500,000
Basic information:
Residential property acquired October 2015 for £1,500,000 and disposed of April 2018 for £2,500,000.
| Estimated Indexation factor | Year |
|---|---|
| 0.20 | October 2015 to April 2018 |
| Total number of days chargeable to ATED | 730 |
| Total days October 2015 to April 2018 | 913 |
Stage 1
Disposal proceeds £2,500,000
Allowable deductions for CGT purposes £1,500,000
Gain on CGT rules £1,000,000
Stage 2
Days in period of ownership that are chargeable to ATED (CD) 730
Total days (TD) 913
CD/TD x gain on CGT rules ((730/913) x £1,000,000) = £799,562
ATED-related chargable gain £799,562
Stage 3
Not required – gain under stage 2
Stage 4
Unadjusted gain from stage 1 above £1,000,000
Less
ATED realated gain £799,562
Notional indexation (see below) £60,131 £859,693
£140,307
Non ATED-related gain £140,307
Notional indexation:
Maximum indexation (£1,500,000 x 0.20) = £300,000
Relevant fraction: ((TD – CD) / TD) x indexation
((913 – 730) / 913 x £300,000) = £60,131