Taxation of Chargeable Gains Act 1992

110 [F1 Indexation for section 104 holdings for corporation tax]. U.K.

(1) [F2 For the purposes of corporation tax this] section and section 114—

(a) apply in place of section 54 in relation to a disposal of a [F3 section 104 holding] for the purpose of computing the indexation allowance;

(b) have effect subject to [F4 section 105].

(2) On any disposal of a [F3 section 104 holding], other than a disposal of the whole of it—

(a) the qualifying expenditure and the indexed pool of expenditure shall each be apportioned between the part disposed of and the remainder in the same proportions as, under this Act, the relevant allowable expenditure is apportioned; and

(b) the indexation allowance is the amount by which the portion of the indexed pool which is attributed to the part disposed of exceeds the portion of the qualifying expenditure which is attributed to that part.

(3) On a disposal of the whole of a [F3 section 104 holding], the indexation allowance is the amount by which the indexed pool of expenditure at the time of the disposal exceeds the qualifying expenditure at that time.

(4) In relation to a [F3 section 104 holding], the qualifying expenditure is at any time the amount which would be the aggregate of the relevant allowable expenditure in relation to a disposal of the whole of the holding occurring at that time.

(5) Subject to subsection (6) below and section 114 the indexed pool of expenditure shall come into being at the time that the holding comes into being or, if it is earlier, when any of the qualifying expenditure is incurred and shall at the time it comes into being be the same as the qualifying expenditure at that time.

(6) In relation to a [F3 section 104 holding] which was in existence immediately before the coming into force of this section, the indexed pool of expenditure on the coming into force of this section shall be the same as it was for the purposes of Part III of Schedule 19 to the M1 Finance Act 1985 immediately before then.

[F5 (6A) Where a disposal to a person acquiring or adding to a [F3 section 104 holding] is treated by virtue of any enactment as one on which neither a gain nor a loss accrues to the person making the disposal—

(a) section 56(2) shall not apply to the disposal (and, accordingly, the amount of the consideration shall not be calculated on the assumption that a gain of an amount equal to the indexation allowance accrues to the person making the disposal), but

(b) an amount equal to the indexation allowance on the disposal shall be added to the indexed pool of expenditure for the holding acquired or, as the case may be, held by the person to whom the disposal is made (and, where it is added to the indexed pool of expenditure for a holding so held, it shall be added after any increase required by subsection (8)(a) below).]

(7) Any reference below to an operative event is a reference to any event (whether a disposal or otherwise) which has the effect of reducing or increasing the qualifying expenditure referable to the [F3 section 104 holding].

(8) Whenever an operative event occurs—

(a) there shall be added to the indexed pool of expenditure the indexed rise, as calculated under subsection (10) or (11) below, in the value of the pool since the last operative event or, if there has been no previous operative event, since the pool came into being; and

(b) if the operative event results in an increase in the qualifying expenditure then, in addition to any increase under paragraph (a) above, the same increase shall be made to the indexed pool of expenditure; and

(c) if the operative event is a disposal resulting in a reduction in the qualifying expenditure, the indexed pool of expenditure shall be reduced in the same proportion as the qualifying expenditure is reduced; and

(d) if the operative event results in a reduction in the qualifying expenditure but is not a disposal, the same reduction shall be made to the indexed pool of expenditure.

(9) Where the operative event is a disposal—

(a) any addition under subsection (8)(a) above shall be made before the calculation of the indexation allowance under subsection (2) above; and

(b) the reduction under subsection (8)(c) above shall be made after that calculation.

(10) At the time of any operative event, the indexed rise in the indexed pool of expenditure is a sum produced by multiplying the value of the pool immediately before the event by a figure expressed as a decimal and determined, subject to subsection (11) below, by the formula—

where—

• RE is the retail prices index for [F6 December 2017]; and

• RL is the retail prices index for the month in which occurred the immediately preceding operative event or, if there has been no such event, in which the indexed pool of expenditure came into being.

[F7 (11) The indexed rise is nil if—

(a) RE, as defined in subsection (10), is equal to or less than RL, as so defined, or

(b) the month referred to in the definition of RL in subsection (10) is after December 2017.]

Textual Amendments

F1 Words in s. 110 heading substituted (with effect in accordance with Sch. 2 para. 100 of the amending Act) by Finance Act 2008 (c. 9), Sch. 2 para. 91

F2 Words in s. 110(1) substituted (with effect in accordance with s. 125(4)(5) of the amending Act) by Finance Act 1998 (c. 36), s. 125(1)

F3 Words in s. 110 substituted (with effect in accordance with s. 123(6) of the amending Act) by Finance Act 1998 (c. 36), s. 123(5)(b)

F4 Words in s. 110(1)(b) substituted (with effect in accordance with s. 72(3) of the amending Act) by Finance Act 2006 (c. 25), s. 72(2)(d)

F5 S. 110(6A) inserted (with effect in accordance with s. 93(11) of the amending Act) by Finance Act 1994 (c. 9), s. 93(6) (with Sch. 12)

F6 Words in s. 110(10) substituted (with effect in accordance with s. 26(6)(7) of the amending Act) by Finance Act 2018 (c. 3), s. 26(4)(a)

F7 S. 110(11) substituted (with effect in accordance with s. 26(6)(7) of the amending Act) by Finance Act 2018 (c. 3), s. 26(4)(b)

Modifications etc. (not altering text)

C2 Ss. 104-114 modified by The Personal Equity Plan Regulations 1989 (S.I. 1989/469), reg. 27(2) (as substituted (with effect in accordance with reg. 1(3) of the amending S.I.) by S.I. 1998/1869, regs. 1(1), 12)

C3 Ss. 104-114 modified (6.4.1999) by The Individual Savings Account Regulations 1998 (S.I. 1998/1870), regs. 1, 34(2) (as amended (6.4.2008) by S.I. 2008/704, regs. 1, 15(2), (6.4.2014) by Finance Act 2014 (c. 26), Sch. 8 paras. 87, 89)

Marginal Citations

M1 1985 c. 54.