Name A pays £2,500 for £50,000 allocated capacity in syndicate X for the 2001 underwriting account. Syndicate X increases its stamp by 10% for the 2002 underwriting account. Name A also purchases an additional £11,000 capacity for £800 in the 2003 auctions. The following year he sells one third of his syndicate X capacity for £2,000. The computation of the capital gain before indexation will be as follows:
| £ | £ | |||
| Disposal proceeds | 2,000 | |||
| Cost of acquisition:
|
|
|
||
| £50,000 | 2001 capacity | 2,500 | ||
| £5,000 | 10% 2002 expansion | 0 | ||
|
£11,000 | 2003 auction (enhancement) |
800 | ||
| £66,000 | 3,300 | |||
| Apportioned cost of 1/3 | 1,100 | (1,100) | ||
| Auction costs (say) |
(50) |
|||
| Gain | 850 | |||
The allowable cost of the remaining capacity is £2,200.
In 2005, Name A pays £1,200 for a further £20,000
capacity in syndicate X. This is treated as enhancement
expenditure. In 2007, Name A sells all of the syndicate capacity
for £6,000.
| £ | £ | |||
| Disposal proceeds | 6,000 | |||
| Cost of acquisition
|
|
|
||
| £44,000 | b/f (see above) | 2,200 | ||
|
£20,000 | 2005 auction (enhancement) |
1,200 | ||
| £64,000 | 3,400 | (3,400) | ||
| Auction costs (say) |
(100) |
|||
| Gain | 2,500 | |||
