188体育

In considering whether the claim satisfies either conditions 2 or 3 as described in CG15700, you should regard 鈥榮mall鈥� as meaning the same as in s122 TCGA92 (see CG57835).

In this context 鈥榮mall鈥� is regarded as

5% or less of the capital sum for condition 2 to apply, or

5% or less of the value of the asset for condition 3 to apply.

HMRC also accepts that a capital sum is 鈥榮mall鈥� if the amount or value of the receipt is 拢3,000 or less, regardless of whether it meets the 5% test.
Where a capital sum is received in respect of damage to an asset which itself forms part of a larger unit, you apply condition 3 in CG15700 to the smallest unit which could reasonably be sold separately. For example, if a cottage is damaged, the unit is the cottage and not the estate on which it stands.

Example 1 - whole sum used for restoration

Mr B buys an asset for 拢10,000 and insures it. When its value is 拢12,000, it is damaged by fire. Mr B receives 拢4,000 compensation from the insurers and spends all of this on restoring the asset. He makes a claim under s23(1) TCGA92.

As all the compensation has been used to restore the asset, s23(1) TCGA92 applies and the capital sum received is deducted from the acquisition cost of the asset. It is not treated as a part-disposal. The cost of restoration is allowable under s38(1)(b) as enhancement expenditure.

-	-	拢
-	Cost of asset	10,000
Deduct	compensation receipt	4,000
-	-	6,000
Add	restoration expenditure	4,000
Equals	Adjusted cost	10,000

Example 2 - part of sum used for restoration

Mr B again buys an asset for 拢10,000 and insures it. When its value is 拢12,000, it is damaged by fire. He receives compensation of 拢4,000 from the insurers but this time he only spends 拢3,900 on restoration.

Mr B can still make a claim under s23(1) TCGA92 as the amount of the capital sum not used on restoration (拢100) is small as it does not exceed 5% of the total capital sum received (拢4,000 x 5% = 拢200). The receipt can therefore be deducted from the acquisition cost.

-	-	拢
-	Cost of asset	10,000
Deduct	compensation receipt	4,000
-	-	6,000
Add	restoration expenditure	3,900
-	Adjusted cost	9,900