Taxation of Chargeable Gains Act 1992 Schedule 2 paragraph 16

Apportionment by reference to straight-line growth of gain or loss over period of ownership

Schedule 2 paragraph 16 provides the rules for time-apportioning gains or losses on assets owned before 6 April 1965, so that only the portion of the gain attributable to the period from that date onwards is treated as a chargeable gain.

• The total gain on an asset owned before 6 April 1965 is assumed to have grown at a uniform rate over the entire period of ownership, and only the fraction relating to the period from 6 April 1965 to disposal — calculated as T/(P+T) — is chargeable to tax.
• Where enhancement expenditure has been incurred on the asset after acquisition, the overall gain is split proportionally across each item of expenditure, and the time-apportionment formula is applied separately to each portion by reference to the date that expenditure was first reflected in the asset's value.
• The earliest start date for the period over which any gain is spread is 6 April 1945, regardless of how long the asset was actually owned, and where an asset is derived from another asset the ownership periods of both are combined for the purposes of the formula.
• Special rules apply to part-disposals occurring before or after 6 April 1965, requiring the remaining part of the asset to be treated as reacquired at market value at the date of the part-disposal, and where only part of a gain is chargeable, any private residence relief fraction is applied to that chargeable part only.