Indexation allowance – individuals

(TCGA 1992 ss 53–57, 109.)

Indexation allowance is abolished for disposals on or after 6 April 2008 by individuals, trustees and personal representatives (but not companies – see p 45). For disposals before that date by such persons, an indexation allowance is given up to April 1998 and taper relief applies thereafter on disposals made after 5 April 1998 (see below). Indexation allowance is deducted before applying taper relief. The indexation allowance is calculated by multiplying each item of allowable expenditure by:

where:

RD is the retail prices index figure for month of disposal;

RI is the retail prices index for month of expenditure (or March 1982 if later).

See pp 46–61 for indexation allowances applicable for corporation tax and pp 62–63 for RPI values.

For disposals after 31 March 1998 of assets acquired on or before that date the factors below can be used to calculate the indexation allowance available to April 1998 for acquisitions in the month shown.

       
  Jan  Feb  Mar  Apr  May  Jun  Jul  Aug  Sept  Oct  Nov  Dec 
1982  –  –  1 047  1 006  0 992  0 987  0 986  0 985  0 987  0 977  0 967  0 971 
1983  0 968  0 960  0 956  0 929  0 921  0 917  0 906  0 898  0 889  0 883  0 876  0 871 
1984  0 872  0 865  0 859  0 834  0 828  0 823  0 825  0 808  0 804  0 793  0 788  0 789 
1985  0 783  0 769  0 752  0 716  0 708  0 704  0 707  0 703  0 704  0 701  0 695  0 693 
1986  0 689  0 683  0 681  0 665  0 662  0 663  0 667  0 662  0 654  0 652  0 638  0 632 
1987  0 626  0 620  0 616  0 597  0 596  0 596  0 597  0 593  0 588  0 580  0 573  0 574 
1988  0 574  0 568  0 562  0 537  0 531  0 525  0 524  0 507  0 500  0 485  0 478  0 474 
1989  0 465  0 454  0 448  0 423  0 414  0 409  0 408  0 404  0 395  0 384  0 372  0 369 
1990  0 361  0 353  0 339  0 300  0 288  0 283  0 282  0 269  0 258  0 248  0 251  0 252 
1991  0 249  0 242  0 237  0 222  0 218  0 213  0 215  0 213  0 208  0 204  0 199  0 198 
1992  0 199  0 193  0 189  0 171  0 167  0 167  0 171  0 171  0 166  0 162  0 164  0 168 
1993  0 179  0 171  0 167  0 156  0 152  0 153  0 156  0 151  0 146  0 147  0 148  0 146 
1994  0 151  0 144  0 141  0 128  0 124  0 124  0 129  0 124  0 121  0 120  0 119  0 114 
1995  0 114  0 107  0 102  0 091  0 087  0 085  0 091  0 085  0 080  0 085  0 085  0 079 
1996  0 083  0 078  0 073  0 066  0 063  0 063  0 067  0 062  0 057  0 057  0 057  0 053 
1997  0 053  0 049  0 046  0 040  0 036  0 032  0 032  0 026  0 021  0 019  0 019  0 016 
1998  0 019  0 014  0 011  –  –  –  –  –  –  –  –  – 

Losses. For disposals after 30 November 1993, indexation allowance can only be used to reduce or extinguish a gain. It cannot be used to create or increase a capital loss.