CG17312 - Indexation: from 6/4/88 example: enhancement expenditure/disposal costs
COST
| - | COSTS - 拢 |
|---|---|
| On 1 May 1985, C Ltd buys a shop as business premises | 50,000 |
| On 1 May 1987 the back room is converted into a storeroom | 17,000 |
| On 1 May 1989 the shop is redecorated | 5,000 |
| On 1 June 1989 the shop is advertised for sale | 1,000 |
| On 1 October 1989 the shop is sold and C Ltd pays solicitor鈥檚 fees | 2,400 |
Sale proceeds were 拢120,000.
The costs of repainting do not qualify, even though they may have been incurred specifically for the purposes of sale, because of TCGA92/S39, see CG14306.
The costs of sale and advertising fall within TCGA92/S38 (1)(c), and therefore do not qualify for indexation. See CG17240.
| - | - | - | - | 拢 |
|---|---|---|---|---|
| - | Disposal proceeds | - | - | 120,000 |
| less | Costs | - | 50,000 | - |
| - | - | - | 17,000 | - |
| - | - | - | 1,000 | - |
| - | - | - | 2,400 | 70,400 |
| - | Unindexed Gain | - | - | 49,600 |
| less | Indexation | 50,000 at 0.234 | 11,700 | - |
| - | 17,000 at 0.153 | 2,601 | 14,301 | 听 |
| - | Indexed Gain | - | - | 35,299 |
The indexed gain may then require to be adjusted if for example C Ltd claims roll-over relief because the proceeds have been expended on other business assets.