CG17721 | Indexation: disposals 30/11/93+: unindexed gain; indexation allowance

From HM Revenue & Customs · Capital Gains Manual

Example 1

January 1984 A buys land for £100,000
January 1994 A sells the land for £180,000 Allowable costs of disposal were £4,000

-	-	-	£
-	Disposal proceeds	-	180,000
Less	Cost	100,000	-
-	Costs of disposal	4,000	104,000
-	Unindexed gain	-	76,000
Less	Indexation (see note) =	100,000 X 0.627	62,700
-	INDEXED GAIN	-	13,300

Example 2

January 1984 A buys land for £100,000
January 1994 A sells the land for £120,000 Allowable costs of disposal were £4,000

-	-	-	£
-	Disposal proceeds	-	120,000
Less	Cost	100,000	-
-	Costs of disposal	4,000	104,000
-	Unindexed loss	-	16,000
Less	Indexation (see note) =	-	16,000
-	ALLOWABLE LOSS	-	NIL

Example 3

January 1984 A buys land for £100,000
January 1994 A sells the land for £70,000 Allowable costs of disposal were £4,000

-	-	-	£
-	Disposal proceeds	-	70,000
Less	Cost	100,000	-
-	Costs of disposal	4,000	104,000
-	Unindexed loss	-	(34,000)
Less	Indexation (see note) =	-	NIL
-	ALLOWABLE LOSS	-	(34,000)

Note: The indexation computation would be 100,000 x 0.627 = £62,700 as in the example at CG17721, but is subject to the general rule that for disposals on or after 30 November 1993 indexation does not create or increase a loss.