Taxation (UK) · Gains and losses on the disposal of movable and immovable property

Part Disposal Formula for Capital Gains in ACCA TX-UK

Updated 11 October 2026 · Fact-checked

A part disposal is a sale of only part of an asset, such as some of a plot of land. You cannot deduct all the original cost. You deduct only the fraction A ÷ (A + B), where A is the proceeds received and B is the market value of the part kept.

Understand Part Disposals

Sometimes you sell only part of an asset. You might sell 4 acres from a 10-acre field. The cost of the whole field was paid once, so you cannot set all of it against the part you sold. That would give too small a gain. Nor can you set none of it against the part sold.

The law says you split the original cost between the part sold and the part kept. The split is based on value, not on size. The part sold is valued at the amount you received. The part kept is valued at its market value on the date of the sale.

The fraction of cost that is allowable is A ÷ (A + B). A + B is the value of the whole asset just before the sale, on a consistent basis. So the fraction is simply the share of total value that you sold.

The part you keep is not taxed now. It carries forward the remaining cost, which is the original cost less the cost used in the part disposal. You will use that remaining cost when you later sell the rest.

The rest of the computation is normal. Proceeds less allowable cost gives the gain. Then you apply any reliefs, losses and the annual exempt amount. For individuals, the TX-UK tax rates and allowances give an annual exempt amount of £3,000, and capital gains tax rates of 18% and 24%.

Key rules to remember

Allowable cost on a part disposal: Allowable cost = Original cost × A ÷ (A + B); A = gross proceeds of the part sold. B = market value of the part kept at the date of disposal.
Chargeable gain on a part disposal: Gain = Proceeds − (Original cost × A ÷ (A + B)) − incidental costs of sale; Incidental costs of disposal are deducted separately. They are not included in A for the fraction.
Cost carried forward: Remaining cost = Original cost − cost used in the part disposal; This is the base cost for the part you still own.
Check on the fraction: A + B = value of the whole asset before the sale; The fraction must be between 0 and 1. If it is not, you have used the wrong figures.
CGT rates for individuals (given in the exam): 18% lower rate; 24% higher rate; annual exempt amount £3,000; These are supplied in the TX-UK tax rates and allowances. Do not memorise other figures.

How to solve Part Disposals questions

Use this order for any part disposal question. It works for land, buildings and other assets that can be split.

1Identify the asset and confirm that only part is sold. Look for words such as 'sold 3 acres of' or 'sold part of'.
2Write down A, the proceeds of the part sold. Use gross proceeds, before the costs of sale.
3Write down B, the market value of the part kept at the date of sale. This is usually given in the question.
4Work out the fraction A ÷ (A + B) and multiply it by the original cost of the whole asset. This is the allowable cost.
5Compute the gain: proceeds less allowable cost less incidental costs of sale, such as legal fees. Add any enhancement expenditure that relates only to the part sold.
6Work out the cost carried forward: original cost less the cost used. Keep it for the later disposal of the rest.
7Deduct losses and the annual exempt amount if the question asks for tax. Then apply the 18% or 24% rate, depending on the taxpayer's taxable income.

Quickest way: Fraction first, then the gain

When to use it: Use it in Section A and Section B objective questions, and for the first part of a Section C computation.

Write A and B on the page straight away, then A + B.
Simplify the fraction before multiplying, for example 60,000 ÷ 80,000 = 3/4.
Multiply by the original cost to get the allowable cost. Then subtract from proceeds.
Check that the cost used is smaller than the original cost. Otherwise recheck B.
Subtract the cost used from the original cost to get the cost carried forward. Do it now so you do not forget it.

Common mistakes in Part Disposals

Using the market value of the whole asset as the denominator instead of A + B.
Students think the fraction is part sold over the whole, and the whole value is sometimes given in the question.
Fix: Always use A + B, where B is the value of the part kept. Only treat the whole as the denominator if it equals A + B on the same basis.
Using the value of the part sold, rather than the proceeds, as A.
Students mix up proceeds and market value when the two differ, for example in a gift.
Fix: A is the actual proceeds in an arm's length sale. Use market value only where the rules deem it, such as a gift to a connected person.
Deducting the sale costs before working out A.
Students net the legal fees off the proceeds early.
Fix: Use gross proceeds in the fraction. Deduct incidental costs separately in the gain computation.
Giving the part kept a fresh cost or ignoring its remaining cost.
Students stop once the gain on the part sold is found.
Fix: Always state the cost carried forward: original cost less cost used. It is often a later question mark.
Using the fraction on the size of the part, such as 4 acres out of 10.
Area looks like a natural way to split.
Fix: Split by value. Parts of the same asset can have very different values, for example plots with road frontage.
Forgetting the annual exempt amount or using the wrong rate in the tax step.
Students rush after the gain figure.
Fix: Deduct £3,000 as the annual exempt amount after losses. Then use 18% on gains falling within the basic rate band and 24% above it.

Worked examples

Example 1

Anna bought a plot of land for £90,000. She sold part of it for £60,000, paying legal fees of £2,000. The remaining land was worth £120,000 at the date of sale. Compute the chargeable gain on the part disposal and the cost carried forward.

Show the solution

A = £60,000. B = £120,000. A + B = £180,000.
Fraction = 60,000 ÷ 180,000 = 1/3.
Allowable cost = £90,000 × 1/3 = £30,000.
Gain = £60,000 − £30,000 − £2,000 = £28,000.
Cost carried forward = £90,000 − £30,000 = £60,000.

Answer: The chargeable gain is £28,000 before the annual exempt amount. The cost carried forward on the land kept is £60,000.

Example 2

Ben bought a field for £200,000. He sold 5 acres of it for £150,000. The remaining land was worth £450,000. He has no other gains or losses this tax year, and his taxable income is £60,000 after the personal allowance. Compute the capital gains tax payable on the sale.

Show the solution

A = £150,000. B = £450,000. A + B = £600,000.
Fraction = 150,000 ÷ 600,000 = 1/4.
Allowable cost = £200,000 × 1/4 = £50,000.
Gain = £150,000 − £50,000 = £100,000.
Deduct the annual exempt amount of £3,000: taxable gain = £97,000.
Ben's taxable income of £60,000 exceeds the basic rate band of £37,700, so the basic rate band is used up. All the gain is taxed at the higher rate of 24%.
Tax = £97,000 × 24% = £23,280.

Answer: The capital gains tax payable is £23,280.

Exam tips

Highlight the words 'part of' in the question. They signal that the formula is needed.
Always show A, B and the fraction as a separate working. Marks in Section C are given for the method even if one figure is wrong.
In objective questions, the denominator is the usual trap. Check that you added A and B.
Keep the cost carried forward in mind. A later part of the question may sell the rest of the asset.
Read the supplementary instructions: calculations are to the nearest £, and workings must be shown in Section C.

Practice questions from Gains and losses on the disposal of movable and immovable property

Part Disposals in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Part Disposals: frequently asked questions

What is the part disposal formula for capital gains?

Allowable cost = original cost × A ÷ (A + B). A is the proceeds of the part sold and B is the market value of the part kept. The result is deducted from the proceeds to find the gain.

Is B the value of the whole asset?

No. B is the market value of the part you keep, at the date of sale. A + B together make up the value of the whole asset before the sale.

Do I use acreage to split the cost of land?

No. The split is by value, using A and B. Acreage only matters if it helps you work out those values.

What happens to the cost of the part I keep?

It is the original cost less the cost used in the part disposal. You use it when you later sell the remaining part of the asset.