Indexation Relief: Bank it 20th October 2020 The Office of Tax Simplification (OTS) has been in consultation with individuals, businesses as well as professional advisers – including accountancy bodies – to review the capital gains tax system and see whether there is any scope to simplify the current tax system. The consultation process closes on 9th November 2020. Speculation has been raised in the press that the Chancellor could use the simplification to increase CGT rates for individuals, to match their income tax rates. This remains a possibility as it would simplify the overall tax system. There is also the possibility that HMRC may wish to align the corporation tax on capital gains to the capital gains tax system as it applies to individuals. Currently companies are able to obtain indexation relief on the disposal of assets. It is frozen to December 2017, but this still increases the base cost of an asset owned since 1982 by a factor of up to 2.5. For example, if a company owns an asset in 1982 which was worth £100,000 at the time, on the sale of this asset, under current legislation, it would be entitled to a deduction of £350,000 when it is sold, saving approximately £50,000 of tax on the indexation relief. If you would like to know more about the consultation and how it might affect you or your company, please contact us.