Tax on collectives special: Examining the part disposal formula

COLLECTIVES

clock • 4 min read

In the last in a series examining collectives, Cathy Russell, tax and estate planning consultant at Canada Life, looks at the part disposal formula, and bed and breakfasting.

The part disposal formula is extremely important when calculating any capital gains tax (CGT) liability where only a proportion of the investment is disposed of. Let us consider a £400,000 investment where the client wishes to make a £15,000 yearly withdrawal. Using the A over A plus B formula: Purchase price x A / A+B Where "purchase price" = original investment at start A = value disposed B = value of remaining investment   The blue circle in the diagram on page two depicts the original investment and the light ring around it depicts year one growth. Think of this as a pie and, when you...

To continue reading this article...

Join Professional Adviser for free

  • Unlimited access to real-time news, industry insights and market intelligence
  • Stay ahead of the curve with spotlights on emerging trends and technologies
  • Receive breaking news stories straight to your inbox in the daily newsletters
  • Make smart business decisions with the latest developments in regulation, investing retirement and protection
  • Members-only access to the editor’s weekly Friday commentary
  • Be the first to hear about our events and awards programmes

Join

 

Already a Professional Adviser member?

Login

More on Your profession

CII: Vulnerable client management is 'an opportunity for growth'

CII: Vulnerable client management is 'an opportunity for growth'

Firms can expand potential client bases

Isabel Baxter
clock 07 April 2026 • 2 min read
Common language used by advisers triggers anxiety and distrust among retirees

Common language used by advisers triggers anxiety and distrust among retirees

Product-led communication one of the biggest drivers of mistrust

Laura Purkess
clock 01 April 2026 • 1 min read
Advisers: Are you even taking your own advice?

Advisers: Are you even taking your own advice?

Exploring the expenditure consolidation conversation

Nick Ryan
clock 25 March 2026 • 4 min read