Part disposals and illustration

In this lesson

1. 0:00 Part disposals in tax explained
2. 0:26 The A over A plus B formula
3. 1:08 Worked example: land disposal calculation
4. 2:19 From chargeable gain to taxable gain

About this lesson

This lesson covers the apportionment method (proceeds over total value multiplied by original cost) and walks you through a worked example showing how to find the cost of the part being disposed of, then arrive at the taxable gain after reliefs. The key technique is the formula A over A plus B times cost, where A represents the proceeds from the part sold and B represents the value of the part retained. This ensures you correctly apportion the original purchase price between the disposed and retained portions. The worked illustration demonstrates applying this method step by step: calculating net proceeds after disposal costs, determining the apportioned cost, identifying the chargeable gain, then reducing it by the annual exempt amount to reach the final taxable gain figure. This is essential knowledge for Taxation papers, where part disposal questions test your ability to handle asset apportionment accurately. Understanding when and how to apply this method will help you tackle similar scenarios with confidence in your exam.

Duration: 3m