Tx notes fa22 Final

 
Example 1
 
 
ST Ltd owned 10 hectares of land which originally cost £26,000 in March 2015. ST sold 2 hectares of 
the land in March 2023 for £16,000.
The remaining 8 hectares were valued at £34,000 in March 2023.
Calculate the chargeable gain on the disposal of the 2 hectares of land in March 2023. 
Indexation factor is as follows:
March 2015 to December 2017
0.269
1.3. A chattel disposal is also dealt with in the same way as for an individual (see Chapter 12) but 
again with the availability in a normal gains calculation of indexation allowance.
1.4. A non chattel wasting asset disposed of by a company will again be dealt with as for 
individuals (see Chapter 12) but again with indexation allowance available on the allowable 
cost.

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2. Assets damaged, lost or destroyed 
2.1. Damaged assets 
(a)
If an asset is damaged and compensation or insurance money is received as a result, then this 
will normally be treated as a part disposal of the asset. The cost is calculated using the normal 
part disposal formula: 
where:
A = value of part disposal
B = market value (MV) of the remainder at the time of part disposal
(b)
If insurance money is received then:
(i)
if the insurance money is not used in restoring the asset a normal part disposal arises, 
with the MV of the part retained equating to the value of the asset in its damaged 
condition.
(ii)
if the insurance money is fully used in restoring the asset the taxpayer can elect to have 
the proceeds deducted from the cost of the asset for a future calculation thereby 
deferring any gain when the insurance proceeds are received.