Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

Capital Gains Manual

From
HM Revenue & Customs
Updated
, see all updates

Indexation: disposals 30/11/93+: transitional relief: outline

FA94/SCH12

FA94/SCH12 introduced a transitional relief to the rules described at CG17700+. This transitional relief is available to individuals, and trustees of settlements made before 30 November 1993. There is no transitional relief for trustees of settlements made on or after 30 November 1993, or for companies. See below.

The transitional relief is available in respect of amounts of INDEXATION LOSS on disposals made by the taxpayer in the period 30 November 1993 to 5 April 1995. See below.

The transitional relief is available for the years 1993-94 and 1994-95 only, and is subject to an overall limit of £10,000. The way in which the transitional relief is given is described at CG17820+.

ICTA88/S574, TCGA92/S161

There are additional rules covering indexation losses on disposals which affect Income Tax liabilities, under ICTA88/S574 or TCGA92/S161. Where there are claims

  • under ICTA88/S574, to set a loss on a disposal of shares in a qualifying trading company against income, see CG17840+;
  • under TCGA92/S161, to reduce the market value of an asset on appropriation to trading stock, see CG17880+.

Eligibility

The transitional relief is available to

  • an individual, or
  • the trustees of a settlement made before 30 November 1993.

These people are referred to as `the taxpayer’.

No transitional relief is available to trustees of a settlement made on or after 30 November 1993, or to companies. For these, the rules described at CG17700+ will apply in full in respect of disposals on or after 30 November 1993.

Indexation losses

The transitional rules provide relief in respect of amounts of INDEXATION LOSS on disposals made by the taxpayer in the period 30 November 1993 to 5 April 1995.

To work out the indexation loss on any disposal, you compare the capital gains computation on the rules applying from 30 November 1993 onwards, see CG17700+, with the computation which would have resulted under the `old indexation rules’, see below. If, on a disposal,

  • there is a loss, and under the old indexation rules there would have been a greater loss; or
  • there is neither a gain nor a loss, but under the old indexation rules there would have been a loss;

the difference is the indexation loss for the transitional relief rules.

The `old indexation rules’ are the rules which would apply if the changes to TCGA92/S53, TCGA92/S55 and TCGA92/S56, and the repeal of TCGA92/S103 and TCGA92/S111 by FA94 had not come into force.

In effect, for disposals of assets other than shares, the old indexation rules will be the rules described at CG17220+. For disposals of shares, you will however still need to take into account the changes to the pooling rules in TCGA92/S110, see CG51625.