Commentary

D2.327 Group capital gains—Assets held at 31 March 1982

Corporate tax
Corporate tax | Commentary

D2.327 Group capital gains—Assets held at 31 March 1982

Corporate tax | Commentary

D2.327 Group capital gains—Assets held at 31 March 1982

Where a company disposes of an asset outside the group which it held on 31 March 1982 and which has already been subject to an intra-group transfer, special provisions apply for:

  1.  

    (a)     the purposes of computing the indexation allowance; and

  2.  

    (b)     the general rebasing provisions

For both these purposes, specific provisions also apply for the 31 March 1982 valuation of shares (see below).

Indexation allowance

For the purposes of computing the indexation allowance:

  1.  

    (a)     the company making the disposal outside the group is treated as having held the asset at 31 March 1982. The indexation allowance is therefore calculated on the 31 March 1982 value for the period from 31 March 1982 to December 2017 (or the date of disposal, if earlier; see C2.301) (unless it would be greater if computed by reference to the company's deemed acquisition cost and no automatic rebasing election has been made1). However, to prevent a double indexation allowance being given, the base cost to the disposing company (following the latest intra-group transfer) must be reduced by any indexation allowances included in the computation of no gain/no loss considerations on previous intra-group transfers2 (this is not relevant where the base cost is taken to be the 31 March 1982 market value under the rebasing rules); and

  2.  

    (b)     as the provisions preventing indexation allowance from increasing or creating an allowable loss apply for disposals after 29 November 1993, special rules were introduced so as not to withdraw the benefit

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