Skip to content
Solved
SearchBrowse
Sign in

Contents

Legislation
Taxation of Chargeable Gains Act 1992

Crossheading General

  • Section 52A Chapter to apply only for corporation tax purposes
  • Section 53 The indexation allowance and interpretative provisions.
  • Section 54 Calculation of indexation allowance.
  • Section 55 Assets owned on 31st March 1982 or acquired on a no gain/no loss disposal.
  • Section 56 Part disposals and disposals on a no-gain/no-loss basis.
  • Section 57 Receipts etc. which are not treated as disposals but affect relevant allowable expenditure.
  1. General
  2. Calculation of indexation allowance.

Section 54 | Calculation of indexation allowance.

From legislation.gov.uk

(1)Subject to any provision to the contrary, the indexation allowance is the aggregate of the indexed rise in each item of relevant allowable expenditure; and, in relation to any such item of expenditure, the indexed rise is a sum produced by multiplying the amount of that item by a figure expressed as a decimal and determined, subject to subsections (2) and (3) below, by the formula—F1

Formula

(RD-RI)RI

where—

RD is the retail prices index for December 2017; and

RI is the retail prices index for March 1982 or the month in which the expenditure was incurred, whichever is the later.

(1A)RepealedF2

(1B)The references in subsection (1) to an item of allowable expenditure do not include any item of expenditure incurred on or after 1 January 2018.F3

(2)If, in relation to any item of expenditure—

(a)the expenditure is attributable to the acquisition of relevant securities, within the meaning of section 108, which are disposed of within the period of 10 days beginning on the day on which the expenditure was incurred, or

(b)RD, as defined in subsection (1) above, is equal to or less than RI, as so defined,

the indexed rise in that item is nil.

(3)If, in relation to any item of expenditure, the figure determined in accordance with the formula in subsection (1) above would, apart from this subsection, be a figure having more than 3 decimal places, it shall be rounded to the nearest third decimal place.

(4)For the purposes of this section—

(a)relevant allowable expenditure falling within paragraph (a) of subsection (1) of section 38 shall be assumed to have been incurred at the time when the asset in question was acquired or provided; and

(b)relevant allowable expenditure falling within paragraph (b) of that subsection shall be assumed to have been incurred at the time when that expenditure became due and payable.

Notes

  1. F1

    Words in s. 54(1) substituted (with effect in accordance with s. 26(6)(7) of the amending Act) by Finance Act 2018 (c. 3), s. 26(3)(a)

  2. F2

    S. 54(1A) omitted (with effect in accordance with Sch. 2 para. 83 of the amending Act) by virtue of Finance Act 2008 (c. 9), Sch. 2 para. 80(3)

  3. F3

    S. 54(1B) inserted (with effect in accordance with s. 26(6)(7) of the amending Act) by Finance Act 2018 (c. 3), s. 26(3)(b)

PreviousNext
PrivacyTerms