- This topic has 1 reply, 2 voices, and was last updated 1 year ago by
Tax Tutor.
Tax Tutor.-
Posts
-
mattytindall
- Topics: 2
- Replies: 0
- ☆
In previous examples of calculating the indexation allowance, it was taken as the indexed cost less the original cost e.g example 3 has indexation allowance of £9,955 – £5,000, however, in the answer to example 4 you have deducted the original cost and the indexed cost from the proceeds to arrive at a chargeable gain of £9,107, should this not be:
Proceeds £15,000
Less allowable cost (£2,500)
Unindexed gain £12,500
Indexation allowance (£3,393 – £2500) (£893)
Chargeable gain £11,607
Tax Tutor
- Topics: 2
- Replies: 3929
- ☆☆☆☆☆
As it says in the notes and in the lecture and is shown in the answer you can indeed split the calculation into a deduction of the cost and then a separate calculation of the IA on the share pool – the problem in your calculation is that your IA has not been correctly calculated – the indexation factor to December 2017 is 1.357 – I think you have used 0.357
mattytindall
Tax Tutor
- You must be logged in to reply to this topic.