Finance Act 2018

26 Freezing of indexation allowance for gains chargeable to corporation tax

(1) TCGA 1992 is amended as follows.

(2) In section 53 (indexation allowance), before subsection (2) insert—

“(1B) Indexation allowance is not allowed in respect of changes shown by the retail prices indices for months after December 2017.”

(3) In section 54 (calculation of indexation allowance)—

(a) in subsection (1), in the definition of “RD”, for “the month in which the disposal occurs” substitute “December 2017”;

(b) before subsection (2) insert—

“(1B) The references in subsection (1) to an item of allowable expenditure do not include any item of expenditure incurred on or after 1 January 2018.”

(4) In section 110 (indexation for section 104 holdings for corporation tax)—

(a) in subsection (10), in the definition of “RE”, for “the month in which the operative event occurs” substitute “December 2017”;

(b) for subsection (11) substitute—

“(11) The indexed rise is nil if—

(a) RE, as defined in subsection (10), is equal to or less than RL, as so defined, or

(b) the month referred to in the definition of RL in subsection (10) is after December 2017.”

(5) In section 114 (consideration for options: corporation tax)—

(a) in subsection (2), in the definition of “RO”, for “the month in which falls the date on which the option is exercised” substitute “December 2017”;

(b) for subsection (3) substitute—

“(3) The indexed rise is nil if—

(a) RO, as defined in subsection (2), is equal to or less than RA, as so defined, or

(b) the month referred to in the definition of RA in subsection (2) is after December 2017.”

(6) Subject to subsection (7), the amendments made by this section have effect in relation to disposals on or after 1 January 2018.

(7) This section does not affect the computation of the amount of so much of any gain as—

(a) is treated for the purposes of the taxation of chargeable gains as having accrued on a disposal on or after 1 January 2018, but

(b) is taken for those purposes to be equal to the whole or a part of a gain that—

(i) would, but for an enactment relating to the taxation of chargeable gains, have accrued on an actual disposal made before 1 January 2018, or

(ii) would have accrued on a disposal assumed under such an enactment to have been made before that date.