How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask TonyTax Your Own Question
TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15940
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
13905389
Type Your Tax Question Here...
TonyTax is online now

Sold a property in January 2015, via my property company,(

Resolved Question:

Sold a property in January 2015, via my property company,( who acquired it in March 1992 for £42,000,) for £310,000.
Spent £130,555, during 2014, on enhancement expenditure and sale and legal cost of sale were £5,072.
What is the indexation factor and what would be the chargeable gain?
Does the indexation amount have to be calculated annually since 1992 and added together?
I know that the gain is taxed at the corporation tax rate of 20%.
Thanks.
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi. When in 2014 was the enhancement expenditure incurred?
Customer: replied 1 year ago.
It was very extensive- conversion of commercial to residential use and took nine months ending Nov 2014.
There was much interest in the property and it sold within 6weeks
Expert:  TonyTax replied 1 year ago.
Thanks.
Leave this with me while I draft my answer.
Customer: replied 1 year ago.
Thank you.
Expert:  TonyTax replied 1 year ago.
Hi again. The indexation factor for March 1992 to January 2015 is 0.868 and the indexation factor for November 2014 to January 2015 was 0 as you will see here: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/405141/January_2015_CT_on_Chargeable_Gains.pdf The property cost £42,000 to buy in March 1992. Add £130,555 enhancement expenditure and your pre-indexed cost is £172,555. Add indexation of £36,456 (£42,000 x 0.868) and your indexed cost is £209,011. Your company sold the prioperty for £310,000. Deduct disposal costs of £5,072 and the indexed cost of £209,011 and you have a taxable gain of £95,917. I hope this helps but let me know if you have any further questions.
Customer: replied 1 year ago.
Thanks very much Tony.
I had visions of having to work out indexation for each year separately and then adding them together.
Presumably, there is a book of tables which gave you the 0.868 figure.
Thanks to you, I can leave my offices within the hour.
Merry Christmas when it comes.
Expert:  TonyTax replied 1 year ago.
Thanks and Merry Christmas to you.
There are tables that tell you how to gte to the indexation factor but there is no need to look at those if HMRC have worked the factors out for you.
TonyTax and other Tax Specialists are ready to help you