CG16740 - Rebasing to 31/3/82: examples

Example 1 - rebasing gives greater gain
Example 2 - rebasing gives greater loss
Example 3 - rebasing creates a loss
Example 4 - no gain or loss
Example 5 - disposal following no gain/no loss transfer
Example 6 - gain rolled over before 31 March 1982

Example 1 - rebasing gives greater gain

A company acquired an asset costing 拢8,000 on 1 March 1980. 31 March 1982 market value 拢7,000. Asset sold (at arm鈥檚 length) for 拢26,000 on 6 March 2013.

REBASED GAIN

- - -
- Disposal proceeds - 26,000
less Cost (value at 31 March 1982) - 7,000
- Unindexed gain - 19,000
Less Indexation 8,000 x 2.131 17,048
- Gain - 1,952

GAIN ON OLD RULES

- - -
- Disposal proceeds - 26,000
less Cost (1 March 1980) - 8,000
- Unindexed gain - 18,000
Less Indexation 8,000 x 2.131 17,048
- Gain - 952

Note: Indexation is based on the higher of relevant allowable expenditure before 31 March 1982 and 31 March 1982 value, see CG16732.

Chargeable gain = 952

Example 2 - rebasing gives greater loss

A company acquired an asset costing 拢14,000 on 6 April 1964. 31 March 1982 market value 拢20,000. Asset sold (at arm鈥檚 length) for 拢10,000 on 6 March 2013.

REBASED LOSS

- - -
- Disposal proceeds - 10,000
less Cost (value at 31 March 1982) - 20,000
- Unindexed loss - (10,000)
Less Indexation 20,000 x 2.131 42,620
- Loss - (52,620)

LOSS ON OLD RULES (no rebasing election made)

- - -
- Disposal proceeds - 10,000
less Cost (6 April 1964) - 14,000
- Unindexed loss - (4,000)
Less Indexation 20,000 x 2.131 42,620
- Loss - (46,620)
- Time apportionment 拢46,620 x 57 11/12 / 58 11/12= (45,828)

Note: The loss to be compared with the rebased loss is the loss after time-apportionment. See also the note to Example 1 at CG16740 regarding indexation.

Allowable loss = (45,828)

Example 3 - rebasing creates a loss

A company purchased an asset costing 拢2,000 on 1 May 1967. 31 March 1982 market value 拢8,000. Asset sold (at arm鈥檚 length) for 拢24,000 on 6 March 2013.

REBASED LOSS

- - -
- Disposal proceeds - 24,000
less Cost (value at 31 March 1982) - 8,000
- Unindexed gain - 16,000
Less Indexation 8,000 x 2.131 17,048
- Loss - (1,048)

GAIN ON OLD RULES

- - -
- Disposal proceeds - 24,000
less Cost (on 1 April 1967) - 2,000
- Unindexed gain - 22,000
Less Indexation 8,000 x 2.131 17,048
- Gain - 4,952

See the note to Example 1 at CG16740 regarding indexation.

As there is a rebased loss but a gain on the old rules, neither a gain nor a loss is deemed to arise.

Example 4 - no gain or loss

A company purchased an asset costing 拢2,000 on 1 May 1967. 31 March 1982 market value 拢8,000. Asset sold (at arm鈥檚 length) for 拢19,048 on 6 March 2013.

GAIN ON OLD RULES

- - -
- Disposal proceeds - 19,048
less Cost (on 1 May 1967) - 2,000
- Unindexed gain - 17,048
Less Indexation 8,000 x 2.131 17,048
- - - Nil

As neither a gain nor a loss arises on the old rules, neither a gain nor a loss is deemed to arise following rebasing.

Example 5 - disposal following no gain/no loss transfer

Asset cost 拢8,000 on 1 March 1980. 31 March 1982 market value 拢7,000. Asset sold to a company in same group for 拢16,000 on 6 April 1992.

These are the same dates and amounts as in CG16740. As a disposal between companies in the same group is is deemed to be at no gain/no loss, see CG45200+, then this is a specified no gain/no loss disposal, see CG16880.

The second company is to be treated as acquiring the asset for 拢13,976 (that is, cost 拢8,000 plus indexation allowance 拢5,976) and rebasing will apply on any subsequent disposal of the asset by her.

Example 6 - gain rolled over before 31 March 1982

Asset A was sold in 1980 for 拢1,000 realising a gain of 拢500.

A company acquired asset B in 1981 for 拢2,000 and a CGTA79/S115 (now TCGA92/S152) roll-over relief claim was made reducing its cost for CGT purposes to 拢1,500.

Asset B was sold in March 2013 for 拢15,000 The market value of asset B at 31 March 1982 was 拢3,000.

REBASED GAIN

- - -
- Disposal proceeds - 15,000
less Cost (market value at 31 March 1982) - 3,000
- Unindexed gain - 12,000
Less Indexation 3,000 x 2.131 6,393
- Gain - 5,607

Note: No adjustment is made to the 31 March 1982 market value of asset B for the gain on asset A which was rolled over before 31 March 1982 against the acquisition cost of asset B.

GAIN ON OLD RULES

- - -
- Disposal proceeds - 15,000
less Cost 1981 2,000 -
- Deduct gain on asset A rolled over 500 1,500
- Unindexed gain - 13,500
less Indexation 3,000 x 2.131 6,393
- Gain - 6,657
- Chargeable gain - 5,607