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HMRC internal manual

Capital Gains Manual

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