Page 23 - F1 Integrated Workbook STUDENT 2018
P. 23
Features of Taxation and the Regulatory Environment
6.3 Capital taxes
Capital tax gains are gains made on the disposal of investments and other non-
current assets. The most common assets taxed are listed stocks and shares.
The tax base should be assets, i.e. what is being taxed.
At a simple level, the gain is calculated as proceeds from sale less cost of the asset.
In most countries, the computation is based on cost but in a few countries an
allowance is made for inflation. In the UK, the cost can be indexed, in certain cases,
using the Retail Price Index. Indexation will be calculated on all allowable costs from
the date of purchase to the disposal date of the asset. This indexation allowance will
reduce the gain.
13
