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HMRC internal manual

Capital Gains Manual

From
HM Revenue & Customs
Updated
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Indexation: example: small part-disposal

August 1983 Q bought a field for £60,000.

3 August 1988 the highway authority acquired a `small part’ compulsorily for £8,000. Relief was claimed under TCGA92/S242 as the proceeds were less than one-fifth of the value.

3 August 1991 the field is sold for £62,000.

      £
       
  Sale proceeds   62,000
LESS Costs 60,000  
  less small part-disposal 8,000 52,000
  Unindexed gain   10,000

(The indexation factor for the adjustment, which is 0.243,
represents notional expenditure on 3 August 1988,
see CG17360.)

  Indexation is 60,000 at 0.565 33,900  
         
  LESS 8,000 at 0.243 1,944 31,956
    ALLOWABLE LOSS   (21,956)