CGT Mixed Use Property

For disposals on or after 30 October 2024, the distinction between residential and non-residential gains has reduced significance because capital gains tax rates were aligned at 18% (basic rate) and 24% (higher rate) for most disposals. However, the apportionment calculation remains necessary for:

• Determining whether the 60-day UK property disposal return requirement applies (residential property gains trigger this for UK residents).
• Non-resident disposals where different charging rules may apply.
• Establishing the correct computational basis where elections for rebasing or alternative valuation methods have been made.

The Calculation

Capital gains on mixed-use property are apportioned using a two-stage calculation process under TCGA 1992, Sch 4ZZC.

Stage 1: Time Apportionment

The residential property gain is first calculated by determining what fraction of the total gain relates to periods when the property consisted wholly or partly of a dwelling. The relevant fraction is:

RD / TD

Where:

• RD = number of days in the relevant ownership period when the property consisted wholly or partly of a dwelling
• TD = total number of days in the relevant ownership period

The relevant ownership period runs from acquisition (or 31 March 1982 if later) to the day before disposal.

Stage 2: Mixed-Use Apportionment

Where there has been “mixed use” on one or more days—meaning the land consisted partly but not exclusively of dwellings—a further apportionment applies. The residential property gain from Stage 1 is multiplied by “the appropriate fraction”, which must be determined by a just and reasonable apportionment attributable to the dwelling(s).

This two-stage approach means you cannot simply apportion the total gain by floor area or value. You must first identify which days had any residential element and then apportion for days with mixed residential and non-residential use.

For more information, please contact us at: consultancy@vantagefeeprotect.com

Jack Hurren
Tax Advisor