CG17850 - Indexation: disposals 30/11/93+: transitional relief: claims under S574
If the total of the amounts in CG17840 DOES exceed the overall £10,000 limit on the transitional relief, the taxpayer may allocate the £10,000 as they wish between the amounts of indexation loss which can be added to the ICTA88/S574 disposals, and the amount of indexation loss which can be deducted from chargeable gains in the year.
Example
F has ICTA88/S574 disposals in 1993-94 giving rise to allowable losses of £15,000. On the old indexation rules, see CG17800, the allowable losses would have been £22,000. So F바카라 사이트™s 1993-94 indexation losses on these disposals are £7,000.
F has other disposals in 1993-94 giving rise to allowable losses of £14,000.
Indexation losses in respect of these disposals are £6,000.
F also has disposals in 1993-94 giving rise to gains of £30,000.
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
| - | - | £ |
|---|---|---|
| - | Relevant gains | - |
| - | (gains £30,000 - losses £15,000) | 15,000 |
| Less | Exempt amount for the year | 5,800 |
| - | Excess of relevant gains over exempt amount | 9,200 |
The amount of the transitional relief would be the smallest of
- the overall limit on the transitional relief, £10,000; or
- the excess of relevant gains over the exempt amount for the year, £9,200; or
- the amount of the indexation losses relating to the disposals included in the computation, £6,000.
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 F바카라 사이트™s chargeable gains could be reduced would be £6,000.
You next add to this £6,000 the amount of indexation losses relating to the ICTA88/S574 disposals. This is £7,000; so the total indexation losses which could be used in 1993-94 would be £13,000. This exceeds the overall limit on the transitional relief, so the use of the indexation losses has to be restricted. F can claim a total of £10,000 indexation losses, and these can be allocated however the taxpayer wishes, up to the amounts of indexation loss which actually arose on the relevant disposals. So F could allocate up to £7,000 of the indexation losses to the ICTA88/S574 disposals, leaving £3,000 by which 1993-94 chargeable gains could be reduced. Alternatively, F could choose to reduce 1993-94 chargeable gains by up to £6,000, leaving £4,000 of indexation losses to be allocated to the ICTA88/S574 disposals to set against income.