Taxation of Chargeable Gains Act 1992 Schedule 4ZZC paragraph 16

Computation of balancing gains or losses on the RPI disposal

Paragraph 16 of Schedule 4ZZC sets out how to calculate any balancing chargeable gain or allowable loss that arises when the transition from RPI (Retail Prices Index) indexation to CPI (Consumer Prices Index) indexation triggers a deemed disposal of a qualifying asset.

• When an asset undergoes the deemed RPI disposal as part of the transition from RPI to CPI indexation, a balancing gain or loss must be computed for that disposal.
• The computation follows the standard chargeable gains rules, treating the deemed disposal proceeds as the consideration received and using the original acquisition cost and any allowable expenditure.
• Any indexation allowance available up to the point of the RPI disposal is applied in the usual way, ensuring that purely inflationary gains measured by RPI up to the changeover date are not taxed.
• The resulting gain or loss is then carried forward and taken into account when the asset is eventually disposed of in a real transaction, ensuring continuity of the tax treatment across the transition.

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