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HMRC internal manual

Capital Gains Manual

Indexation: from 6/4/88: general principles

  1. The allowance is available in respect of gains accruing to all taxpayers, including companies, trustees and personal representatives.
  2. No claim by the taxpayer is required. Where an indexation allowance may be due but has not been included in a computation of a chargeable gain, the District should draw the attention of the taxpayer to the position, preparing a revised computation, where appropriate.
  3. In order to compute the allowance it is necessary to establish the date on which the expenditure was incurred, see CG17251.
  4. The indexation allowance is calculated by reference to the `RELEVANT ALLOWABLE EXPENDITURE’ (RAE), see CG17240.
  5. The costs of acquisition and each item of enhancement expenditure are indexed separately.
  6. Shares and other assets which form part of a pool, see CG11800+, are subject to a number of special provisions. They are therefore dealt with in a separate section of the guidance. See CG50500+.


  1. For disposals made between 6 April 1998 and 5 April 2008, except for disposals made by companies within the charge to Corporation Tax, indexation allowance is calculated to April 1998 and not to the month of disposal. For companies with the charge to Corporation Tax indexation was frozen from 1 January 2018 so for any disposals after 31 December 2017, of assets held before this time, indexation is calculated to December 2017 and not the month of disposal.