»Ê¹ÚÌåÓýapp

TCGA92/S41

D Ltd acquires land in March 1983 for £100,000.

In October 1984 it incurred expenditure of £400,000 which qualified for 50% initial allowances.

In March 1993 it granted a 99 year lease for a premium of £480,000. »Ê¹ÚÌåÓýapp residual value was £120,000.

It is clear that after deducting 4/5 of the allowable expenditure and giving indexation allowance thereon there is a substantial loss.

Total capital allowances up to then were

-	£
initial	200,000
writing-down (say)	128,000
-	328,000

»Ê¹ÚÌåÓýapp capital allowances to be taken into account are however not merely those that have been given, but those that may be given in the future, see CG15410. »Ê¹ÚÌåÓýapprefore one must also take into account the balance of £72,000, which will be written down over the next few years. However this cannot reduce the expenditure below nil. »Ê¹ÚÌåÓýapp capital allowances cannot be deducted from the cost of the land because that was not expenditure which qualified for capital allowances.

-	-	-	£
Disposal proceeds	-	-	480,000
Total cost	500,000	-	-
Allow	480,000 x 100,000	80,000	-
-	(480,000 + 120,000)	-	-
Less Capital allowances	480,000 x 400,000	320,000	-
-	(480,000 + 120,000)	-	-
(RESTRICTED)	-	NIL	80,000
-	Unindexed Gain	-	400,000
Less Indexation	80,000 x 0.676	-	54,080
-	INDEXED GAIN AFTER TCGA92/S41	-	345,920

TCGA92/S41 cannot create an indexed gain, therefore the loss is nil and there is no gain.