Taxation of Chargeable Gains Act 1992 section 56

Part disposals and disposals on a no-gain/no-loss basis

Section 56 deals with how the indexation allowance is calculated on part disposals of assets and on disposals that are treated as giving rise to neither a gain nor a loss.

• On a part disposal, allowable expenditure must first be apportioned between the part disposed of and the part retained before calculating any indexation allowance — indexation only applies to the portion of expenditure relating to the part actually disposed of.
• On a no-gain/no-loss disposal, the deemed consideration is set so that the unindexed gain equals the indexation allowance, meaning the two cancel each other out and no chargeable gain or allowable loss arises.
• Where a loss would otherwise arise on a disposal and the allowable deductions have been inflated by the no-gain/no-loss assumption on any such transfer made on or after 30 November 1993, the deductions are recalculated ignoring that assumption, reducing or eliminating the loss.
• A no-gain/no-loss disposal is one that is treated under any other statutory provision (other than certain specified sections) as producing neither a gain nor a loss for the person making the disposal.