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HMRC internal manual

Capital Gains Manual

Introduction and computation: indexation: more complicated computations from 6.4.88: capital allowances - restriction of losses


TCGA92/S41 enables you to restrict an allowable loss by the amount of the capital allowances, see below, on the asset in question. This means that the person making the disposal does not get a double allowance, by being given relief for both the capital allowances and the allowable CG loss.

The method of restricting the allowable loss is to reduce the expenditure qualifying as a deduction. Because indexation is calculated on the Relevant Allowable Expenditure [`RAE’] it is necessary to take into account the effect of TCGA92/S41 in calculating the amount of the indexation.

If there is an INDEXED GAIN TCGA92/S41 does not apply. See CG17450 for disposals on or after 30 November 1993.

Meaning of capital allowance/renewal allowance

  1. CG15405 explains the meaning of capital allowances and renewals allowance for the purpose of TCGA92/S41.
  2. CG15410 deals with balancing charges.
  3. CG15425 explains what happens where assets have been transferred under an election for written down value to apply.