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HMRC internal manual

Capital Gains Manual

From
HM Revenue & Customs
Updated
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Indexation: disposals 30/11/93+: unindexed gain; indexation allowance

Example 1

  • January 1984 A buys land for £100,000
  • January 1994 A sells the land for £180,000 Allowable costs of disposal were £4,000
  £      
         
  Disposal proceeds 180,000    
LESS Cost 100,000    
  Costs of disposal   4,000 104,000
Unindexed gain 76,000      
LESS Indexation (see note) = 100,000 X 0.627 62,700  
INDEXED GAIN 13,300      
         

Example 2

  • January 1984 A buys land for £100,000
  • January 1994 A sells the land for £120,000 Allowable costs of disposal were £4,000
  £      
         
  Disposal proceeds 120,000    
LESS Cost 100,000    
  Costs of disposal   4,000 104,000
Unindexed loss 16,000      
LESS Indexation (see note) = 16,000    
ALLOWABLE LOSS NIL      
         

Example 3

  • January 1984 A buys land for £100,000
  • January 1994 A sells the land for £70,000 Allowable costs of disposal were £4,000
  £    
       
  Disposal proceeds 70,000  
LESS Cost 100,000  
  Costs of disposal 4,000 104,000
Unindexed loss (34,000)    
LESS Indexation (see note) = Nil  
ALLOWABLE LOSS (34,000)    

Note: The indexation computation would be 100,000 x 0.627 = £62,700 as in the example at CG17721, but is subject to the general rule that for disposals on or after 30 November 1993 indexation does not create or increase a loss.