Taxation of Chargeable Gains Act 1992 Schedule 7AD paragraph 4

The cost of the single asset

Section 4 of Schedule 7AD sets out how to determine the cost base of the "single asset" representing an insurance company's interest in a partnership's relevant assets, including the treatment of initial and subsequent capital contributions and the adjustment required where qualifying corporate bonds are held.

• The initial cost of the single asset equals the capital the company contributed when it joined the partnership.
• Any further capital contributions are treated as enhancement expenditure reflected in the asset's state or nature at disposal.
• Where the partnership holds qualifying corporate bonds, the allowable cost is proportionately reduced using the formula (A−B)/A, based on the book values of total securities and qualifying corporate bonds.
• Book value means the value shown in the partnership's accounts at the end of the relevant period of account.