CG73640 | Dwellings subject to ATED: computation of gains and losses: chargeable interests held on 5 April of the relevant year: para 5 election applies - example

Basic information:

Residential property acquired April 2006 for £3,000,000 and disposed of April 2016 for £6,000,000. Election under paragraph 5 made

Estimated Indexation factor: April 2006 to April 2016 - 0.4

Total number of actual chargeable days and pre April 2013 ATED days 1,825

Total days 3,650

Stage 1

Disposal proceeds £6,000,000

Allowable deductions for CGT purposes £3,000,000

Gain £3,000,000

Stage 2

ctual and pre April 2013 ATED days (CD) 1,825

Total days 3,650

CD/TD x stage 1 gain ((1,825/3,650)) x £3,000,000) = £1,500,000

ATED related chargeable gain £1,500,000

Stage 3

Unadjusted gain from stage 1 £3,000,000

ATED related gain £1,500,000

Notional indexation (see below) £600,000 £2,100,000

Non ATED related gain £900,000

Notional indexation:

Indexation due on disposal

3,000,000 x 0.4 = £1,200,000

Apply factor (CD-TD)/TD

(3,650 - 1,825)/(3,650) x £1,200,000

Notional Indexation is £600,000