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Indexation Relief

Calculating Indexation relief on commercial property

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Hi, please would anybody be able to check my calculations to see if I have got this correct. I have never done this before so need to make sure I have got it right.

Investment property company purchased a commercial property in October 1983 for £108,169. The property is now due to be sold for £450,000.

The retail price index was 86.36 in October 1983 and 278.1 in December 2017 (when indexation relief was frozen). The retail price index has therefore increased by 222% so the indexation relief due on the company's original purchase cost is £240,135.

So the chargable gain would be £101,696 (being sale proceeds £450,000 minus orginal cost £108,169 minus indexation relief £240,135). The chareable gain would then be liable for the current 19% corporation tax.

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Replying to The Dullard:
By Hugo Fair
01st May 2022 13:00

... not forgetting if company spent any money buying, selling or improving the asset.
I know it's obvious, but OP refers to "sale proceeds" which is potentially ambiguous.

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Replying to Hugo Fair:
Just So
By Just So
01st May 2022 13:10

Yes you are quite right, apologies I should have added these but was just trying to keep things simple, but will include any costs re acquisition and disposal. It was more whether I have calculated the Indexation relief correctly.

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