Autumn Budget 2017 Reaction: Indexation Allowance
Chancellor Philip Hammond delivered his second Budget of 2017 to Parliament this afternoon. We have created a video and a series of short blogs on various tax and business related Budget announcements to help clarify some of the details behind the headlines.
Indexation Allowance Frozen for Companies
Indexation allowance reduces the taxable gains realised by companies on the sale of capital assets, such as property. The allowance increases the original cost of the asset by the movement in the Retail Price Index (‘RPI’) between purchase and sale.
For asset sales on or after 1 January 1018, the allowance will be frozen at the amount that would be due based on the RPI for December 2017. Consequently, companies will be pay more tax on such gains than they would have done if this measure was not introduced.
Indexation allowance is not available to individuals.