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HMRC internal manual

Capital Gains Manual

Indexation: disposals 30/11/93+: use of transitional relief

Relief is limited to an overall limit of £10,000 of indexation losses. This is to be given first on disposals in 1993-94, see below. Any unused indexation losses from 1993-94, and any additional indexation losses arising in 1994-95, are then available in 1994-95, see CG17830+.

The relief is available to set against RELEVANT GAINS. Relevant gains are the total amount of chargeable gains arising to the taxpayer in the year of assessment, less the allowable losses arising in the year, computed in accordance with CG17700+. The relief may also create, or increase, losses which affect Income Tax liabilities

  • under ICTA88/S574, where there is a claim to set a loss on a disposal of shares in an unquoted trading company against income; or
  • under TCGA92/S161, where an asset is transferred to trading stock and a claim is made under TCGA92/S161(3) to reduce the cost of the asset by the amount of the loss on the transfer.

The instructions and examples, below and at CG17826+, describe the simple position where losses arising in 1993-94 or 1994-95 are set only against chargeable gains. Where you have a claim under ICTA88/S574, or a claim under TCGA92/S161 (3), you should read also the further instructions at CG17840+.

Relief is only given where the relevant gains for the year, see above, exceed the exempt amount for the year, see CG18000+. If a taxpayer has

  • relevant gains for the year 1993-94 which exceed the exempt amount, and
  • indexation losses in 1993-94 in respect of disposals on or after 30 November 1993,

the chargeable gains are to be reduced by the smallest of

  • £10,000, or
  • the excess of relevant gains over the exempt amount for the year, or
  • the amount of the indexation losses.