CGT 30 Assets Lost or Destroyed

Question 1

If an asset is lost or destroyed and compensation is received …

Answer 1

this is a disposal of that asset.

Question 2

The date of the disposal is ….

Answer 2

the date of receipt of the compensation.

Question 3

The proceeds are …

Answer 3

the compensation received and the scrap value of the asset (if any).

Question 4

If a replacement asset is bought within …..

Answer 4

12 months the gain can be ‘rolled over’ against the base cost of the new asset if a claim is made within four years of the end of the tax year of the disposal. Any cash retained is immediately chargeable.

Question 5

A capital sum derived from a chargeable asset, such as damages in respect of giving up the right to take legal action…..

Answer 5

is also chargeable to CGT.

Question 6

Lost or destroyed with replacement asset:

Answer 6

Sale proceeds (compensation received and scrap) X
Less: Cost (X)
Gain before relief X
Less: Relief (X)
Gain (compensation received – cost replacement) X

Base cost of replacement asset:
Cost X
Less: Relief rolled over (X)
Revised base cost X

Question 7

If an asset becomes worthless ….

Answer 7

a negligible value claim can be made to crystallise the loss.
The loss can be claimed as a loss for that year or either of the two preceding tax years

Question 7

If an asset becomes worthless ….

Answer 7

a negligible value claim can be made to crystallise the loss.
The loss can be claimed as a loss for that year or either of the two preceding tax years