Taxation of Chargeable Gains Act 1992 section 3

Capital allowances

Section 3 of Schedule 3 deals with how capital allowances are treated when an asset is rebased to its 31 March 1982 market value for the purposes of computing chargeable gains.

• When rebasing applies under section 35, the asset is treated as having been sold and immediately reacquired on 31 March 1982 at its then market value.
• Any capital allowances or renewals allowances previously claimed on the original cost of acquiring the asset are redirected so that they are treated as having been given against the deemed 31 March 1982 reacquisition expenditure instead.
• This ensures that the restrictions on allowable losses in section 41 and the rules for wasting assets qualifying for capital allowances in section 47 operate consistently with the rebased acquisition cost.
• The practical effect is that capital allowances already received reduce the rebased 31 March 1982 value rather than the original historic cost when computing any chargeable gain or allowable loss on disposal.