Deferred tax on a revalued factory, which rate for the manner of recovery?

Question

Working through a Case Study style scenario and wanted to sanity check my thinking. An entity revalues its factory to £2m, tax base is £1m (original cost), so a £1m temporary difference. They intend to keep using the factory, capital allowances are on the original cost, but a sale would be taxed at 20% (gains) against 25% on trading profits. IAS 12 measures deferred tax on the expected manner of recovery. My instinct is 25% on the whole difference because we plan to use the asset, but the revaluation surplus makes me second guess whether part of it implies an eventual sale at 20%. How are others treating this? Thanks

Deferred tax on a revalued factory, which rate for the manner of recovery?

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