Part disposal allowable expenditure (UK capital gains)
When part of a chargeable asset is disposed of, allowable expenditure relating to the whole asset is generally apportioned using A/(A+B), where A is the disposal consideration and B is the market value of the retained part at the disposal date. The remaining apportioned cost is carried forward for the retained part. Expenditure relating solely to one part is considered separately, and special rules or accepted alternatives can apply.
Worked example
A plot of land originally cost £120,000. A part is sold for £40,000 and the retained land is worth £160,000 at that date. Assuming the normal formula applies, allowable whole-asset cost for the part sold is £120,000 × £40,000/(£40,000 + £160,000) = £24,000; £96,000 remains attributable to the retained land.
Common mistake
Using the proportion of physical area sold as the automatic cost fraction, or using the retained asset’s original value instead of its value at disposal.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | TX (UK) | Direct | June 2026–June 2027 |