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

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.