CG17831 - Indexation: disposals 30/11/93+: use of transitional relief: example
This example continues from the example in CG17826. In 1994-95 D has disposals giving rise to allowable losses of £6,000. On the old indexation rules, the allowable losses would have been £8,000. So D's 1994-95 indexation losses are £2,000. D also has £800 of unused indexation losses brought forward from 1993-94.
D has disposals in 1994-95 giving rise to gains of £15,000.
The transitional relief available to D for 1994-95 is computed as follows
|
|
£ |
|
Relevant gains 1994-95 |
|
|
(gains £15,000 - losses £6,000) |
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 is the smallest of
- the overall limit on the transitional relief, £10,000, LESS the amount used in 1993-94, £5,200, = £4,800; or
- the excess of relevant gains over the exempt amount for the year, £3,200; or
- the amount of indexation losses for 1994-95, £2,000, together with any unused indexation losses brought forward from 1993-94, £800, = £2,800.
The amount of indexation losses available is the smallest of the these amounts, so D's chargeable gains for 1994-95 are reduced by this amount. The result is
|
|
£ |
|
Net chargeable gains |
9,000 |
less |
Transitional relief |
2,800 |
|
|
6,200 |
less |
Exempt amount |
5,800 |
|
|
|
|
1994-95 gains subject to CGT |
400 |
The combined effect of the transitional rules in the above example can be summarised as follows.
|
1993-94 |
|
1994-95 |
|
£ |
|
£ |
Gains |
20,000 |
|
15,000 |
Losses |
9,000 |
|
6,000 |
|
|
|
|
Relevant gains |
11,000 |
|
9,000 |
|
|
|
|
Exempt amount for the year |
5,800 |
|
5,800 |
|
|
|
|
Excess of relevant gains over exempt amount |
5,200 |
|
3,200 |
|
|
|
|
Indexation losses for the year |
6,000 |
|
2,000 |
Indexation losses used |
5,200 |
+ b/fwd 800 |
2,800 |
|
|
|
|
Gains subject to CGT |
Nil |
|
400 |
|
|
|
|
Indexation losses carried forward |
800 |
|
|
