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HMRC internal manual

Capital Gains Manual

From
HM Revenue & Customs
Updated
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Groups: indexation allowance restriction: redeemable preference shares

If a company disposes of redeemable preference shares in another company and the companies

  • were linked immediately before the disposal, but
  • did not become linked until after the latest acquisition of the shares

then the indexation allowance should be restricted. In this situation it would be just and reasonable to restrict indexation to that for the period ending when the companies first became linked. As in the case of debts on a security this involves substituting the RPI for the month in which the companies 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
         
      RD  

in TCGA92/S54 (1).