Finance Leasing Manual - FLM33.22

Part disposal of asset

Paragraph 12(2) Schedule 12 FA 1997 provides that on a part disposal only a proportion of cumulative accountancy rental excess is to be deducted. That proportion is to be arrived at by multiplying that excess by the usual CG part disposal formula (' A ÷ (A + B)' - see CG 12730). Thus if the unused excess is £1000, the part disposal proceeds are £10,000 and the market value of the part retained is £15,000 the excess which may be deducted is £1000 x £10,000 ÷ (£10,000 + £15000) = £400.