The average monthly salary of employees includes basic salary, indexation allowance
, overtime pay, holiday fund, any allowances received by employees during the reference period, as well as back payments.
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
. This will reduce the CGT on subsequent sales after April 5 by pounds 18,000 in case one, and pounds 33,000 in case two.
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
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.