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HMRC internal manual

Capital Gains Manual

Options: exercise of an option: indexation allowance


TCGA92/S145 is now relevant only for the purposes of Corporation Tax.

If an asset is disposed of and the allowable expenditure includes both the cost of acquiring a call option and the cost of acquiring the asset on exercising the option (see CG12314) then for the purpose of computing the indexation allowance only, TCGA92/S145 provides that the option consideration and the transfer consideration should be regarded as separate items of expenditure incurred when the option was acquired and the purchase took place respectively.

For further guidance on indexation allowance see CG17700+.

For guidance on indexation and quoted options see CG55445.