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HMRC internal manual

Capital Gains Manual

Indexation: basic computations

The allowance is normally the amount arrived at by applying the indexation factor to each item of expenditure (or value), within TCGA92/S38 (1)(a) and (b), incurred or treated as incurred by the person disposing of the asset. Although in practice computations often treat the allowance as an addition to cost, in strictness the allowance is deducted from the gain in order to arrive at the chargeable gain, and computations sent to taxpayers or their agents should be laid out in the correct form.

Layout of guidance

The rest of the instructions are laid out as follows.

CG17230 - CG17292 Rules from 6/4/1988 - Basic principles and simple computations
CG17310 - CG17313 Rules from 6/4/1988 - Basic examples
CG17350 - CG17409 Rules from 6/4/1988 - Various specific circumstances
CG17430 - CG17450 Rules from 6/4/1988 - Indexation and Capital Allowances
CG17480 - CG17517 Rules from 6/4/1988 - Further examples - Specific circumstances
CG17540 - CG17549 Specific rules applicable April 1982 to March1985
CG17570 - CG17601 Specific rules applicable April 1985 to March 1988
CG17700 - CG17768 Specific rules applicable from 30 November 1993.
CG17800 - CG17880 FA 1994 Transitional Relief - applicable 1993/4 and 1994/5 only


Shares and other assets which form part of a pool are subject to different bases of computation. Please refer to the relevant guidance in the section beginning at CG50500 when dealing with such assets.