Indexation allowance
You'll learn what indexation allowance is and how it protects you from being taxed on gains caused purely by inflation. This video explains the core principle—that when you sell an asset acquired after 31 March 1982, you can uplift its base cost using the retail price index to remove inflationary gains from your tax
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In this lesson
- 0:00 What is indexation allowance
- 0:24 How indexation reduces chargeable gains
- 1:05 Calculating indexation for enhanced assets
- 1:20 Indexation freeze and current rules
- 1:40 Key restriction: indexation cannot create losses
About this lesson
calculation. You'll discover how to apply the indexation factor to both original purchase costs and enhancement expenditure, and understand the critical rules: indexation was frozen in December 2017, and it can never create or increase a loss. This is essential knowledge for the Taxation papers, where indexation allowance frequently appears in capital gains calculations.
Duration: 2m
Transcript
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