SolvedCG73643 | Dwellings subject to ATED: computation of gains and losses: Rule for certain disposals to which both ATED-related CGT and Non-Resident CGT relate – examples
From HM Revenue & Customs · Capital Gains Manual
Asset held on 5 April 2013 and always within the scope of ATED (re-working of CG73628 example 1)
Acquisition in April 2014 for £4,000,000 (re-working of CG73634 example 1)
Asset held on 5 April 2013 and always within the scope of ATED (re-working of CG73628 example 1)Basic information:
Residential property acquired April 2006 for £3,000,000 and disposed of April 2016 for £6,000,000.
The property had a value of £5,000,000 at 5 April 2013 and a value of £5,600,000 at 5 April 2015.
| Total number of days chargeable to ATED (say) | Amount |
|---|---|
| 700 | |
| Pre April 2015 ATED chargeable days | 365 |
| Post April 2015 ATED chargeable days | 335 |
| Total days 6 April 2013 to 5 April 2015 | 730 |
| Total days 6 April 2015 to disposal | 365 |
Step 1
Determine the amount of the post-April 2015 ATED-related gain or loss
| Disposal proceeds | Amount |
|---|---|
| - | £6,000,000 |
| Market value at 5 April 2015 | £5,600,000 |
| Notional post April 2015 gain | £400,000 |
| Relevant days | Amount |
|---|---|
| Days in relevant ownership period from April 2015 which are ATED chargeable days (CD) | 335 |
| Days in the relevant ownership period from April 2015 to the date of disposal (TD) | 365 |
CD/TD x notional post-April 2015 gain ((335/365)) x £400,000) = £367,123
Post-April ATED related chargeable gain £367,123
|—|
Step 2
Determine the amount of the pre-April 2015 ATED-related gain or loss
| Date | Amount |
|---|---|
| Market value at 5 April 2015 | £5,600,000 |
| Market value at 5 April 2013 | £5,000,000 |
| Notional pre April 2015 gain | £600,000 |
| Relevant days | Amount |
|---|---|
| Days in relevant ownership period from April 2013 which are ATED chargeable days (CD) | 365 |
| Days in the relevant ownership period from April 2013 to April 2015 (TD) | 730 |
CD/TD x notional pre-April 2015 gain ((365/730)) x £600,000) = £300,000
Pre-April ATED related chargeable gain £300,000
Step 3
Add step 1 to step 2
| Related gain | Amount |
|---|---|
| Post-April 2015 ATED-related gain | £367,123 |
| Pre-April 2015 ATED-related gain | £300,000 |
| ATED-related gain | £667,123 |
This differs slightly from the ATED-related gain of £639,269 which would arise if the disposal was not also subject to Non-Resident CGT (see CG73628). This is to prevent part of the gain from being subject to both charges.
To calculate the Non-Resident CGT charge on the gain see CG73860P.
2. Acquisition in April 2014 for £4,000,000 (re-working of CG73634 example 1)
Basic information:
Residential property acquired April 2014 for £4,000,000 and disposed of April 2018 for £6,000,000.
| Total number of days chargeable to ATED | Amount |
|---|---|
| - | 730 |
| Total days April 2014 to April 2015 | 365 |
| Total days April 2015 to April 2018 | 1,095 |
Market value at 5 April 2015 is £4,250,000
The amount of the gain or loss which is ATED-related will depend on when the ATED chargeable days fall. This is demonstrated by the two different calculations below.
Situation 1: If all days chargeable to ATED fall after 5 April 2015
Step 1
Determine the amount of the post-April 2015 ATED-related gain or loss
| Disposal proceeds | Amount |
|---|---|
| - | £6,000,000 |
| Market value at 5 April 2015 | £4,250,000 |
| Notional post April 2015 gain | £1,750,000 |
| Relevant days | Amount |
|---|---|
| Days in relevant ownership period from April 2015 which are ATED chargeable days (CD) | 730 |
| Days in the relevant ownership period from April 2015 to the date of disposal (TD) | 1,095 |
CD/TD x notional post April 2015 gain ((730/1,095)) x £1,750,000) = £1,166,667
Post-April ATED related chargeable gain £1,166,667
Step 2
Determine the amount of the pre-April 2015 ATED-related gain or loss
Market value at 5 April 2015 £4,250,000
Auisition cost £4,000,000
Notional pre-April 2015 gain £250,000
Days in relevant ownership period from acquisition which are ATED chargeable days (CD)
Days in the relevant ownership period from acquisition to April 2015 (TD) 365
CD/TD x notional pre-April 2015 gain ((0/365)) x £250,000) = £0
Pre-April ATED related chargeable gain £0
Step 3
Add step 1 to step 2
| Gain | Amount |
|---|---|
| Post-April 2015 ATED-related gain | £1,166,667 |
| Pre-April 2015 ATED-related gain | £0 |
| ATED-related gain | £1,166,667 |
Situation 2: If all days chargeable to ATED fall at the beginning of the ownership period
Step 1
Determine the amount of the post-April 2015 ATED-related gain or loss
| Disposal proceeds | Amount |
|---|---|
| - | £6,000,000 |
| Market value at 5 April 2015 | £4,250,000 |
| Notional post April 2015 gain | £1,750,000 |
Days in relevant ownership period from April 2015 which are ATED chargeable days (CD) 365
Days in the relevant ownership period from April 2015 to the date of disposal (TD) 1,095
CD/TD x notional post April 2015 gain ((365/1,095)) x £1,750,000) = £583,333
Post-April ATED related chargeable gain £583,333
Step 2
Determine the amount of the pre-April 2015 ATED-related gain or loss
| Market value | Amount |
|---|---|
| Market value at 5 April 2015 | £4,250,000 |
| Acquisition cost | £4,000,000 |
| Notional pre-April 2015 gain | £250,000 |
| Days | Number |
|---|---|
| Days in relevant ownership period from acquisition which are ATED chargeable days (CD) | 365 |
| Days in the relevant ownership period from acquisition to April 2015 (TD) | 365 |
CD/TD x notional pre-April 2015 gain ((365/365)) x £250,000) = £250,000
Pre-April ATED related chargeable gain £250,000
Step 3
Add step 1 to step 2
| Gain | Amount |
|---|---|
| Post-April 2015 ATED-related gain | £583,333 |
| Pre-April 2015 ATED-related gain | £250,000 |
| ATED-related gain | £833,333 |
These amounts differ from the ATED-related gain of £1,000,000 which would arise if the disposal was not also subject to Non-Resident CGT (see CG73634). This prevents part of the gain from being subject to both charges.
To calculate the Non-Resident CGT charge on the gain see CG73877.