Assets Acquired Before 1982

Key facts

Assets held on 31 March 1982 are “rebased” — the market value on that date replaces the original cost.
Rebasing applies automatically for disposals from 6 April 2008 onwards (no election needed).
If rebasing produces a gain but the original cost would produce a loss (or vice versa), the result is treated as no gain no loss.
The “kink test” prevents rebasing from creating or increasing a gain or loss.
Companies may also need to apply indexation allowance from March 1982.

Why Rebasing Exists

Capital Gains Tax was introduced in 1965. Without rebasing, a disposal of a very long-held asset could result in taxing gains that accumulated decades ago, at a time when CGT did not exist or operated very differently. Rebasing to 31 March 1982 ensures that only gains accruing from that date are charged to CGT.^[1]

How Rebasing Works

For any asset you held on 31 March 1982, the gain is calculated as:^[2]

Gain = Disposal proceeds − Market value at 31 March 1982 − Enhancement expenditure after 31 March 1982 − Incidental costs of disposal

The original purchase price (pre-1982 cost) is ignored and replaced by the 31 March 1982 market value.

Worked Example

Margaret bought shares for £500 in 1970. Their market value on 31 March 1982 was £3,000. She sells them in 2025/26 for £25,000 with £200 in dealing charges.

Step	Calculation	Amount
Disposal proceeds		£25,000
Less: 31 March 1982 value		−£3,000
Less: incidental costs of disposal		−£200
Gain		£21,800

Without rebasing, the gain would have been £24,300 (£25,000 − £500 − £200). Rebasing excludes the £2,500 gain that accrued before March 1982.

Automatic Rebasing (from 6 April 2008)

For disposals on or after 6 April 2008, rebasing applies automatically. You do not need to make an election — the 31 March 1982 market value is always used as the base cost.^[2]

Before 6 April 2008, rebasing was optional and required a global election (covering all assets). This is now historical — all disposals today use automatic rebasing, subject to the kink test.

The Kink Test

Automatic rebasing is subject to the kink test (also called the “paragraph 1(2) rule”). This prevents rebasing from producing a different type of result (gain vs loss) than the original cost would produce.^[3]

How the Kink Test Works

Result Using 1982 Value	Result Using Original Cost	Outcome
Gain	Gain	Use 1982 value (rebased gain)
Loss	Loss	Use 1982 value (rebased loss)
Gain	Loss	No gain no loss
Loss	Gain	No gain no loss

Kink Test Example

John bought land in 1975 for £10,000. Its value on 31 March 1982 was £8,000 (it had fallen in value). He sells it in 2025 for £9,000.

Basis	Proceeds	Cost	Result
Using 1982 value	£9,000	£8,000	Gain of £1,000
Using original cost	£9,000	£10,000	Loss of £1,000
Kink test result			No gain no loss

Because one basis gives a gain and the other gives a loss, the disposal is treated as producing no gain and no loss. John has no CGT to pay, but cannot claim a loss either.

Establishing the 31 March 1982 Value

The method for establishing the market value at 31 March 1982 depends on the type of asset:

Asset Type	How to Establish Value
Listed shares & securities	Quarter-up method from the Stock Exchange Daily Official List (lower of: ¼ up from bid to ask, or mid-point of highest/lowest marked bargains)
Property	Retrospective professional valuation by a RICS-qualified surveyor
Unquoted shares	Professional valuation, possibly agreed with HMRC SAV team
Other assets	Any reasonable evidence of market value (comparable sales, etc.)

Tip: You can ask HMRC’s Shares and Assets Valuation (SAV) team to agree a value before you file your return. This provides certainty and avoids later disputes about the base cost.

Rebasing for Companies

Companies disposing of assets held since before 31 March 1982 also use the rebased value. In addition, companies can claim indexation allowance on the rebased value from March 1982 up to December 2017 (when the allowance was frozen). This compensates for inflation during the holding period.

Frequently Asked Questions

What is rebasing to 31 March 1982?

Rebasing means using the market value of an asset on 31 March 1982 as the acquisition cost for CGT purposes, instead of the original purchase price. This ensures that only gains accruing since that date are taxed. It applies automatically for disposals from 6 April 2008.

Do I need to make an election for rebasing?

No. Since 6 April 2008, rebasing applies automatically to all disposals of assets held on 31 March 1982. Before that date, an election was available. The “kink test” still applies to prevent rebasing from creating artificial gains or losses.

What is the kink test?

The kink test compares the result using the 31 March 1982 value with the result using the original cost. If one produces a gain and the other a loss, the disposal is treated as giving rise to neither a gain nor a loss. This prevents rebasing from creating outcomes that distort the true economic position.

How do I find the 31 March 1982 value?

For listed shares, the Stock Exchange Daily Official List provides the value. For property, you may need a retrospective professional valuation. HMRC’s Shares and Assets Valuation team can agree valuations. Keep evidence to support whatever figure you use.

Sources

Capital Gains Manual: CG16700 – Rebasing to 31 March 1982 — HMRC
Capital Gains Manual: CG16760 – Automatic rebasing — HMRC
Capital Gains Manual: CG16900 – Kink test — HMRC