Taxes Consolidation Act 1997 section 557

Part disposals

Section 557 provides rules for apportioning expenditure when only part of an asset is disposed of, so that only the portion of cost attributable to the part sold is deductible in computing a chargeable gain or allowable loss.

• Where part of an asset is disposed of, the allowable cost is apportioned using the formula A/(A + B), where A is the disposal consideration and B is the market value of the part retained.
• Expenditure that is wholly attributable to the part disposed of, or wholly to the part retained, is allocated directly without using the apportionment formula.
• The apportionment must be carried out before applying the capital allowances restriction under section 555, and capital allowances used to restrict a loss on an earlier part disposal reduce those available on a subsequent disposal.
• Where land comprising several acquisitions is partly disposed of, the part disposal rules apply to the smallest acquisition or group of acquisitions from which the disposal is made.