indexation allowance

indexation allowance

a relief in calculating CAPITAL GAINS by adjusting the allowable expenditure for increases in the retail price index from the month of the expenditure to the month of the disposal but not counting any period before March 1982. For all taxpayers other than companies, this allowance has been replaced by TAPER RELIEF and indexation ceased at April 1998.
Mentioned in ?
References in periodicals archive ?
removing the indexation allowance an outdated relief for inflation which provides benefits to companies that are not available to individuals
In computing the capital gain the value of the immovable property as at January 1, 1980 (or cost if the date of acquisition is later), the cost of any additions after January 1, 1980 or the date of acquisition if later, any expenditure incurred for the production of the gain and the indexation allowance, are deducted from the sale proceeds.
The problem may be avoided if the owner makes a property transfer before April 5 to "bank" the Indexation Allowance.
But many gains will still be taxed at 18% going forward, with the gains themselves potentially higher as a result of the abolition of indexation allowance.
The CGT changes are dramatic and include the abolition of two valuable reliefs; indexation allowance and taper relief, and the introduction of a flat tax rate of 18%.
The tax-free annual exempt amount (currently pounds 9,200) will remain, but taper relief and indexation allowance will no longer be available.
In the Pre-Budget Report (PBR) on October 9 2007, the Chancellor announced that a single rate of capital gains tax (CGT) at 18 per cent would apply to all gains realised from April 6 2008 onwards and that the existing indexation allowance and taper relief would be abolished from that date.
General investors in shares and those with buy-to-let and second properties, who achieve a minimum rate of 24% after 10 years of indexation will find their position improved, but accumulated indexation allowance (which applied to assets owned before 1998) will not be available.
The way CGT is calculated has been changed and as from last April, you cannot use any indexation allowance.
Rates of capital gains tax are subject to an indexation allowance and taper relief
If you sell property after April 6 next year, you will not get taper relief or indexation allowance.
I am familiar with the indexation allowance which is due to April 1998 but I understand some form of taper relief may also be due.