Autumn Budget 2017: Removal of indexation allowances for limited companies

Limited companies are currently entitled to increase the base cost of their capital assets on a disposal by using the indexation allowance to account for the effects of inflation.

It was announced in today’s Budget that the indexation allowance will be frozen as from 1 January 2018.

Limited companies making a disposal of a capital asset on or after 1 January 2018 will only be able to calculate the indexation allowance using the Retail Price Index for December 2017. The measure is designed to align the treatment of capital gains with the rules applicable to individuals.