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HMRC internal manual

Capital Gains Manual

From
HM Revenue & Customs
Updated
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Indexation: disposals 30/11/93+: previous no gain/loss transfer before 30/11/93

Example

  • January 1989 A buys land for £150,000
  • January 1992 A transfers the land at no gain/no loss to spouse
  • January 1995 spouse sells the land for £130,000 Allowable costs of disposal were £4,000.

COMPUTATION ON A

  £    
       
  Disposal proceeds (see note 1) 184,650  
LESS Cost 150,000  
Unindexed gain 34,650    
LESS Indexation January 1989 - January 1992  
  150,000 x 0.231 34,650  
CHARGEABLE GAIN/ALLOWABLE LOSS NIL    

COMPUTATION ON SPOUSE

  £    
       
  Disposal proceeds 130,000  
LESS Cost (see note 1) 184,650  
  Costs of disposal 4,000 188,650
Unindexed loss (58,650)    
LESS Indexation (see note 2) = NIL  
ALLOWABLE LOSS 58,650    

Note 1: On the no gain/no loss transfer, the asset is disposed of and acquired for such an amount as gives the transferor no gain/no loss, TCGA92/S56 (2).

Note 2: This indexation is subject to the general rule that for disposals on or after 30 November 1993 indexation does not create or increase a loss.