Taxation of Chargeable Gains Act 1992 section 42

Part disposals

Section 42 sets out how allowable costs must be apportioned when only part of an asset is disposed of, so that the correct proportion of costs is deducted in computing the chargeable gain on the part disposed of, with the remainder carried forward against the retained part.

• When part of an asset is disposed of, the original acquisition and incidental costs must be split between the part sold and the part retained using a statutory formula
• The fraction of costs deductible against the disposal proceeds is A ÷ (A + B), where A is the disposal consideration and B is the market value of the part retained
• The part disposal apportionment must be carried out before applying any restriction of losses for capital allowances, and expenditure clearly attributable solely to the part sold or the part retained need not be apportioned
• The apportionment must be performed before any no-gain/no-loss adjustments, such as transfers between spouses or civil partners, business asset roll-over relief, or intra-group transfers