CG16702 - Rebasing to 31/3/82: outline of the legislation

Mandatory rebasing could lead in some circumstances to odd-looking results. For example, if –

• an individual bought an asset (at arm’s length) for £10,000 in 1978;
• the market value of the asset at 31 March 1982 was £8,000;
• the asset was sold (at arm’s length) in 1993 for £16,000,

the gain accruing since 31 March 1982 would be more than the gain over the full period of ownership. The rebasing rules therefore included a `kink-test' to determine when the rebasing rules should not be applied, see CG16730.

CGT Simplification, including a single rate of CGT applies for disposals on or after 6 April 2008. As part of CGT Simplification, the allowable cost of assets held at 31 March 1982 is their value on that date and the ‘kink test’ must not be applied.

CGT Simplification does not apply to companies who pay corporation tax on their chargeable gains. The ‘kink test’ continues to apply in respect of their disposals of assets held at 31 March 1982.