CGT 30 Assets Lost or Destroyed Flashcards

1
Q

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

A

this is a disposal of that asset.

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2
Q

The date of the disposal is ….

A

the date of receipt of the compensation.

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3
Q

The proceeds are …

A

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

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4
Q

If a replacement asset is bought within …..

A

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.

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5
Q

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

A

is also chargeable to CGT.

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6
Q

Lost or destroyed with replacement asset:

A

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

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7
Q

If an asset becomes worthless ….

A

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

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7
Q

If an asset becomes worthless ….

A

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

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