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HMRC internal manual

Capital Gains Manual

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

D has disposals in 1993-94 giving rise to allowable losses of £9,000. Disposals on or after 30 November 1993 are computed in accordance with CG17700+. On the old indexation rules, see CG17800, there would have been allowable losses of £15,000. So D’s 1993-94 indexation losses, see CG17800, are £6,000.

D also has disposals in 1993-94 giving rise to gains of £20,000.

The transitional relief available to D for 1993-94 is computed as follows

    £
     
  Relevant gains 1993-94 (gains £20,000 - losses £9,000) 11,000
LESS Exempt amount for the year 5,800
  Excess of relevant gains over exempt amount 5,200

The amount of the transitional relief is the smallest of

  • the overall limit on the transitional relief, £10,000; or
  • the excess of relevant gains over the exempt amount for the year, £5,200; or
  • the amount of indexation losses for 1993-94, £6,000.

The excess of relevant gains over the exempt amount for the year is the smallest of these amounts, so D’s chargeable gains for 1993-94 are reduced by this amount. The result is

    £
     
  Net chargeable gains 11,000
LESS Transitional relief 5,200
    5,800
LESS Exempt amount 5,800
  1993-94 NIL

D has unused indexation losses available of £800 (£6,000 less used 1993-94 £5,200). These are available for carry forward to 1994-95. See CG17830+.