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

The human question: How PE-backed firms can retain their talent

The human question: How PE-backed firms can retain their talent

'In a people business, cultural integration is key to preserving client trust, adviser continuity and value'

Andrew Houghton
clock 15 July 2026 • 4 min read
HSBC to roll out targeted support later this year

HSBC to roll out targeted support later this year

Bank has applied for its pre-application support service

Sophia Panayi
clock 14 July 2026 • 2 min read
Support for clients with disabilities not 'broad enough' in financial advice

Support for clients with disabilities not 'broad enough' in financial advice

Evidence of ‘massive improvements’ but there’s still more to do

Sophia Panayi
clock 14 July 2026 • 6 min read