CG17517 | Indexation: example: chattel exemption and capital allowances
From HM Revenue & Customs · Capital Gains Manual
X Ltd buys a van in March 1989 for £6,800.
It sells it in March 1993 for £5,000.
Net capital allowances are £1,800.
Disregarding TCGA92/S41 the computation would be
| - | - | - | £ |
|---|---|---|---|
| - | Disposal proceeds (deemed) - TCGA92/S262 (3) | - | 6,000 |
| Less | Cost | - | 6,800 |
| - | Unindexed loss | - | 800 |
| Less | Indexation | 6,800 x 0.240 | 1,632 |
| - | ALLOWABLE LOSS | - | (2,432) |
Applying TCGA92/S41 gives the following result:
| - | - | - | £ |
|---|---|---|---|
| - | Disposal proceeds (deemed) | - | 6,000 |
| Less | Cost | 6,800 | - |
| - | Deduct capital allowances | 1,800 | 5,000 |
| - | Unindexed Gain | - | 1,000 |
| Less | Indexation | 5,000 X 0.240 | 1,200 |
| - | ALLOWABLE LOSS | - | (200) |