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HMRC internal manual

Capital Gains Manual

Groups: indexation allowance restriction: debts on a security

If the companies were not linked immediately after the debt was acquired by the creditor company but

  • subsequently became linked, and
  • were linked immediately before the disposal of the debt by the creditor company

then the indexation allowance is restricted. TCGA92/S182 (2) provides that in these circumstances indexation is only due up to the time the companies first became linked. This is achieved by substituting the RPI for the month in which the companies first became linked (or the RPI for March 1982 if later) for the RPI for the month of actual disposal (RD) in the indexation formula

cost x (RD – RI)


in TCGA92/S54 (1).