PART IIIIncome Tax, Corporation Tax and Capital Gains Tax
CHAPTER IIICapital Gains
87Calculation of indexation allowance
1
The provisions of this section have effect for the purpose of computing the indexation allowance on a disposal to which section 86 above applies.
2
RD is the retail prices index for the month in which the disposal occurs; and
RI is the retail prices index for March 1982 or the month which is the twelfth month after that in which the expenditure was incurred, whichever is the later.
3
If, in relation to any item of expenditure.—
a
the month in which the expenditure was incurred is less than thirteen months before the month in which the disposal occurs, or
b
RD, as defined in subsection (2) above, is equal to or less than RI, as so defined,
the indexed rise in that item is nil.
4
If, in relation to any item of expenditure, the figure determined in accordance with the formula in subsection (2) above would, apart from this subsection, be a figure having more than three decimal places, it shall be rounded to the nearest third decimal place.
5
For the purposes of this section—
a
relevant allowable expenditure falling within paragraph
a
of subsection (1) of section 32 of the [1979 c. 14.] Capital Gains Tax Act 1979 shall be assumed to have been incurred at the time when the asset in question was acquired or provided; and
b
relevant allowable expenditure falling within paragraph (b) of that subsection shall be assumed to have been incurred at the time when that expenditure became due and payable.