CG17847 - Indexation: disposals 30/11/93+: transitional relief: claims under S574
E has ICTA88/S574 disposals in 1993-94 giving rise to allowable losses of 拢15,000. On the old indexation rules, see CG17800, the allowable losses would have been 拢18,000. So E鈥檚 1993-94 indexation losses on these disposals are 拢3,000.
E has other disposals in 1993-94 giving rise to allowable losses of 拢14,000.
Indexation losses in respect of these disposals are 拢2,000.
E also has disposals in 1993-94 giving rise to gains of 拢23,000.
You first establish the amount of the reduction in 1993-94 chargeable gains which would (on its own) have been available in respect of indexation losses, as follows
| - | - | 拢 |
|---|---|---|
| - | Relevant gains | - |
| - | (gains 拢23,000 - losses 拢14,000) | 9,000 |
| Less | Exempt amount for the year | 5,800 |
| - | Excess of relevant gains over exempt amount | 3,200 |
The amount of the transitional relief would be the smallest of
- the overall limit on the transitional relief, 拢10,000; or
- the excess of relevant gains over the exempt amount for the year, 拢3,200; or
- the amount of the indexation losses relating to the disposals included in the computation, 拢2,000.
The amount of the indexation losses relating to the disposals included in the computation is the smallest of these amounts. So the maximum amount by which E鈥檚 chargeable gains could be reduced in 1993-94 would be 拢2,000.
You next add to this 拢2,000 the amount of indexation loss relating to the ICTA88/S574 disposals. This is 拢3,000, so the total indexation losses which could be used in 1993-94 would be 拢5,000. As this is less than the overall limit of 拢10,000, all these amounts are available to E.
The result is that E has 1993-94 gains subject to CGT as follows:
| - | - | 拢 |
|---|---|---|
| - | Net chargeable gains | 9,000 |
| Less | Transitional relief | 2,000 |
| - | - | 7,000 |
| Less | Exempt amount | 5,800 |
| - | 1993-94 gains subject to CGT | 1,200 |
In addition, E can set off against income under ICTA88/S574 an amount of 拢15,000 plus indexation losses 拢3,000 = 拢18,000.
E has used 拢2,000 + 拢3,000 = 拢5,000 of indexation losses in 1993-94. If E has further indexation losses in 1994-95, these may be used up to a maximum of 拢5,000 (that is, the 拢10,000 overall limit LESS 拢5,000 used in 1993-94).