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HMRC internal manual

Capital Gains Manual

Indexation: from 6/4/88: part-disposals


Where there is a part-disposal, TCGA92/S42 provides that the expenditure is apportioned, and only part is regarded as relating to what is disposed of. See CG12731. Therefore only the part of the expenditure relating to the disposal is RAE, see CG17240 and CG17246c, to be taken into account for indexation purposes.

On the occasion of a subsequent complete, or part, disposal of the asset, the remaining expenditure, or the apportioned part, is allowed as a deduction in the computation. Indexation is then given on this expenditure. The RI month continues to be the month in which the expenditure was incurred, see CG17251. It is not the month in which the previous part disposal occurred.

See example in CG17481.

Assets held at 31/03/82: previous part disposal

Where there has been a part-disposal of the asset since 31 March 1982 but before 6 April 1988, and indexation is based on the 31 March 1982 value, that value is reduced by application of the appropriate part-disposal fraction. This is because under TCGA92/S56 (1), where an asset is held on 31 March 1982, for the purposes of indexation it is assumed that the asset was sold and reacquired at market value on that date. But there has been a part-disposal in the intervening period and therefore TCGA92/S42 must be applied to reduce the allowable expenditure.

See Example 11 in CG16940.