Tax Rates

Indexation allowance

  • Indexation allowance to compensate for the effect of inflation is no longer available for disposals after 5 April 2008 by individuals or trustees, but is still available for companies. However, when a company makes a capital gain on or after 1 January 2018, the indexation allowance is frozen at the amount calculated using indexation factors up to December 2017.
  • When calculating capital gains for companies, relief is given in the form of an indexation allowance. This allowance is added to the cost of the asset and is worked out by reference to the retail prices index (RPI).
  • From November 1993 the indexation allowance can only reduce an unindexed gain to nil. Prior to this it could create or increas...