Taxes Consolidation Act 1997 Schedule 20 paragraph 2

Calculation of unindexed gain

Paragraph 2 of Schedule 20 sets out how the unindexed gain on a material disposal of an interest in an offshore fund is calculated as the first step in determining the tax charge.

• The unindexed gain must be computed before any tax charge on a material disposal can be determined.
• The gain is calculated as it would be for capital gains tax purposes, but without applying the indexation allowance under section 556(2).
• Any income tax or corporation tax charge arising under the offshore fund provisions (section 745) is disregarded in the computation, to prevent section 551 from reducing the gain to nil.
• The standard capital gains tax rules are subject to modifications for deaths and share-for-share transactions, as provided by section 741(2) to (6) and paragraph 3 of the Schedule.