CG73638 - Dwellings subject to ATED: computation of gains and losses: chargeable interests held on 5 April of the relevant year: para 5 election applies

In most cases it will not benefit the taxpayer to make an election under TCGA92/SCH4ZZA paragraph 5 for the 鈥榬ebasing鈥� of the gain chargeable to CGT not to apply.

The most likely circumstance where an election is favourable is where the market value of the taxpayer鈥檚 interest in the dwelling at 5 April of the relevant year is greater than the value of the interest at the time of disposal.

An election under paragraph 5 must be made in the taxpayer鈥檚 ATED-related CGT return (not in their corporation tax return, where the taxpayer is a company within the charge to CT), or in an amendment to the return, of their ATED-related gain or loss. An election applies only to the single-dwelling interest in respect of which it is made, and the taxpayer may choose whether or not to make an election in respect of any other single-dwelling interest it holds.

An election must be made in the return for the first relevant high value disposal (i.e in 2013-14 or later) of the interest in question or any part of that interest. The election is irrevocable and applies to all later disposals of the taxpayer鈥檚 interest where the first disposal is a part disposal.

The rules for computing gains and losses where an election is made are set out below:

Where a person makes an election under paragraph 5 of Schedule 4ZZA in relation to a disposal, or has made one in respect of an earlier disposal of the chargeable interest in question, the 鈥榬ebasing鈥� outlined in CG73626 does not apply. Instead the computational steps are as set out in CG73632, with a couple of modifications to CD and TD鈥�

  • CD is the total days from the date of acquisition or, if later, 31 March 1982 to the day before the date of disposal which were days chargeable to ATED from 1 April of the relevant year onwards or, for days before 1 April of the relevant year, were days that would have been chargeable to ATED if ATED had been in place at that time (notional ATED days).
  • TD is the total number of days from the date of acquisition or, if later, 31 March 1982 to the day before the date of disposal.