CG17765 | Indexation: disposals 30/11/93+: assets held by transferor at 31/3/82
From HM Revenue & Customs · Capital Gains Manual
January 1981 A buys land for £80,000 (31 March 1982 market value = £90,000)
January 1992 A transfers the land at no gain/no loss to spouse
January 1994 spouse sells the land for £160,000 Allowable costs of disposal were £4,000
COMPUTATION ON A
| - | - | £ |
|---|---|---|
| - | Disposal proceeds | 153,630 |
| Less | Value at March 31 1982 | 90,000 |
| - | Unindexed gain | 63,630 |
| Less | Indexation March 1982 - January 1992 90,000 x 0.707 | 63,630 |
| - | CHARGEABLE GAIN/ALLOWABLE LOSS | NIL |
COMPUTATION ON SPOUSE
| - | - | £ | |
|---|---|---|---|
| - | Disposal proceeds | - | 160,000 |
| Less | Cost (see note 2) | 90,000 | 90,000 |
| - | Costs of disposal | 4,000 | 94,000 |
| - | Unindexed gain | - | 66,000 |
| Less | Indexation (see note 3) = | - | 66,000 |
| - | ALLOWABLE LOSS | - | NIL |
As the indexation given on the disposal, £66,000, is greater than the rolled-up indexation of £63,630, no further adjustment is required.
Note 1: On the no gain/no loss transfer, the asset is disposed of and acquired for such an amount as gives the transferor no gain/no loss, TCGA92/S56 (2).
Note 2: TCGA92/S55 (6)(b) removes indexation added to the transferee’s RAE on the no gain/no loss transfer.
Note 3: TCGA92/S55 (6)(a) requires indexation to be recomputed on the basis that the asset was held on 31 March 1982. This would be 90,000 x 0.779 = £70,110 but is subject to the general rule that for disposals on or after 30 November 1993 indexation does not create or increase a loss.