SolvedCG17513 | Indexation: example: sale and leaseback
From HM Revenue & Customs · Capital Gains Manual
X Ltd acquires in March 1987 a printing press costing £100,000.
It is disposed of in March 1993 under a sale and leaseback arrangement for £27,000.
The capital allowances, after deducting the balancing charge, amount to £73,000.
A sale and leaseback is treated as a part-disposal. See CG70774.
The value of the retained interest is £1,000.
| - | - | - | - | - | £ | |
|---|---|---|---|---|---|---|
| - | Disposal proceeds | - | - | - | - | 27,000 |
| Less | Cost | - | - | - | - | 100,000 |
| - | Allow | 27,000 | x | 100,000 | 96,248 | - |
| - | - | (27,000 + 1,000) | - | - | - | - |
| - | Deduct capital allowances | - | - | - | 73,000 | 23,428 |
| - | - | Unindexed gain | - | - | - | 3,572 |
| Less | Indexation | 23,428 x 0.385 | - | - | - | 9,020 |
| - | - | ALLOWABLE LOSS | - | - | - | 5,448 |