CG17600 - Indexation: disposals 4/85 to 3/88: example: no gain/loss

5 June 1970 A Ltd acquired a property for £100,000.

5 September 1984 it transferred the property to B Ltd a fellow group member within the meaning of ICTA70/S272, now TCGA92/S170.

5 November 1985 company B disposed of the property outside the group for £800,000.

The market value of the property at 31 March 1982 was £680,000 and company B makes a claim for this to be substituted for the relevant allowable expenditure on the property up to 31 March 1982.

Ignoring any cost of transfer etc, the gain is computed as follows:-

-	-	-	£
Disposal by A	-	-	-
-	Cost	-	100,000
Plus	Indexation	100,000 x 0.134	13,400
-	Deemed sale proceeds	-	113,400
Disposal by B	-	-	-
-	Disposal proceeds	-	800,000
-	Deemed cost	113,400	-
Less	Indexation given to A Ltd	13,400	100,000
-	Unindexed gain	-	700,000
Less	Indexation given to A Ltd	680,000 x 0.207	140,760
-	INDEXED GAIN	-	559,240