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.