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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Indexation: from 6/4/88 date of expenditure

TCGA92/S54 (4)

In general, under TCGA92/S54 (4), the dates on which items of RAE are assumed to have been incurred for the purposes of indexation allowance are:-

  1. costs of acquisition, when the asset was acquired or provided, and
  2. additional expenditure, when the expenditure became due and payable.

See example in CG17312.

There are no special provisions concerning expenditure financed by borrowing. This is because generally the seller’s indexation runs up to the date of disposal and the buyer’s runs from the same date. The only mismatch occurs when the seller sells before he buys, because indexation cannot run backwards.

Apart from cases of the second and third types in the paragraph below headed ‘Special cases’, the actual date of payment for an asset is of no significance. Hire purchase transactions follow the procedure in CG12850.

Cases where the taxpayer acquired the asset for deferred consideration, in circumstances where the principles of Marren v Ingles, 54TC76, apply, are dealt with at CG15130. As this is expenditure on acquiring the asset, indexation runs on this expenditure from the date on which the asset was acquired, under CG17251(a).

Special cases

There are specific provisions to determine the date of expenditure in these cases:

  • Shares: consideration given for a new holding. See TCGA92/S131 and CG51632.
  • Calls on shares. See TCGA92/S113 and CG51632
  • Options. See TCGA92/S145 and CG17404.
  • Certain no loss/no gain transactions. See TCGA92/S55 and CG17400 - CG17402.

Assets derived from other assets

CG17370 deals with cases to which TCGA92/S43, assets derived from other assets, applies. Note the concession applicable where a taxpayer has acquired consecutively two interests in the same land.