Indexation: disposals 30/11/93+: assets held by transferor at 31/3/82
For assets which were held by the transferor at 31 March 1982, or which can be traced back through an unbroken sequence of no gain/no loss transfers to 31 March 1982, TCGA92/S55 (6) applies on the eventual disposal. The amounts of indexation allowance which were included in the transferee’s RAE on previous no gain/no loss transfers are taken back out of RAE, under TCGA92/S55 (6)(b). The indexation allowance due on the eventual disposal is computed afresh, under TCGA92/S55 (6)(a).
Because in these cases the indexation is computed afresh at the date of disposal, it will all be subject to the general restriction described at CG17700+. Without special rules, this indexation could not create or increase a loss.
The Finance Act 1994 introduced new subsections (7) to (11) to TCGA92/S55 to deal with these cases. They ensure that amounts of indexation which would have been included in the transferee’s RAE under TCGA92/S56 (2) (but which were taken out again by TCGA92/S55 (6)(b) on the eventual disposal) on no gain/no loss transfers prior to 30 November 1993 remain in the computation of gain or loss.
These amounts are referred to as `rolled-up indexation’.
To calculate the chargeable gain, or allowable loss, in these cases you need to
- Compute any gain in the normal way, see CG17700+
- Compute the amount of rolled-up indexation, see above.
TCGA92/S55 (7), TCGA92/S55 (8) & TCGA92/S55 (9)
- the amount of indexation allowed in the computation exceeds the amount of rolled-up indexation, no further adjustment is required;
- the amount of indexation allowed in the computation would be less than the amount of rolled-up indexation, you should allow the full amount of the rolled-up indexation in arriving at the chargeable gain or allowable loss.
These points are illustrated in the following examples.