Budget 2011 – Capital gains tax indexation
The Chancellor has announced that the capital gains tax annual exempt amount is to be increased on an annual basis by reference to the consumer prices index (CPI) from the 2012-13 tax year instead of the retail prices index (RPI).
Legislation will be included in the Finance Bill 2012 to replace the reference to the RPI in section 3 TCGA with a reference to the CPI. The indexation is subject to override if Parliament determines a different amount should apply.
This change is part of a Governmental decision to move the underlying indexation assumption for all direct taxes to CPI.