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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Indexation: disposals 30/11/93+: assets held by transferor at 31/3/82

  • January 1981 A buys land for £80,000 (31 March 1982 market value = £90,000)
  • January 1992 A transfers the land at no gain/no loss to spouse
  • January 1994 spouse sells the land for £160,000 Allowable costs of disposal were £4,000

COMPUTATION ON A

  £  
     
  Disposal proceeds 153,630
LESS Value at March 31 1982 90,000
Unindexed gain 63,630  
LESS Indexation March 1982 - January 1992 90,000 x 0.707 63,630
CHARGEABLE GAIN/ALLOWABLE LOSS NIL  

COMPUTATION ON SPOUSE

  £    
       
  Disposal proceeds 160,000  
LESS Cost (see note 2) 90,000 90,000
  Costs of disposal 4,000 94,000
Unindexed gain 66,000    
LESS Indexation (see note 3) = 66,000  
ALLOWABLE LOSS NIL    

As the indexation given on the disposal, £66,000, is greater than the rolled-up indexation of £63,630, no further adjustment is required.

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: TCGA92/S55 (6)(b) removes indexation added to the transferee’s RAE on the no gain/no loss transfer.

Note 3: TCGA92/S55 (6)(a) requires indexation to be recomputed on the basis that the asset was held on 31 March 1982. This would be 90,000 x 0.779 = £70,110 but is subject to the general rule that for disposals on or after 30 November 1993 indexation does not create or increase a loss.