When calculating indexation allowance, which RPI value do you use if the asset was acquired before January 1, 2018?

The correct choice involves using the Retail Price Index (RPI) from December 2017 when calculating the indexation allowance for assets acquired before January 1, 2018. This is because the indexation allowance is designed to account for the inflationary increase in the cost of an asset over the time it has been held.

For assets acquired prior to this date, the RPI in December 2017 serves as a benchmark for the value of the asset at the point of acquisition, allowing for a precise calculation of how inflation has affected the asset's value since then. By using the RPI from December 2017, taxpayers can ensure that they are accurately reflecting the economic conditions at the time of acquisition, thus maintaining a fair method of calculating allowances due to inflation.

Using the RPI from December 2018 or January 2018 would not correctly reflect the values pertinent to the acquisition date, as these reflect periods post-acquisition. Similarly, the RPI from the month of acquisition does not apply when considering the indexation allowance after the significant change in rules that occurred at the beginning of 2018. Therefore, the indexation allowance correctly aligns with the RPI from December 2017 for assets acquired before January 1,