CGT 30 Assets Lost or Destroyed Flashcards
If an asset is lost or destroyed and compensation is received …
this is a disposal of that asset.
The date of the disposal is ….
the date of receipt of the compensation.
The proceeds are …
the compensation received and the scrap value of the asset (if any).
If a replacement asset is bought within …..
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.
A capital sum derived from a chargeable asset, such as damages in respect of giving up the right to take legal action…..
is also chargeable to CGT.
Lost or destroyed with replacement asset:
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
If an asset becomes worthless ….
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
If an asset becomes worthless ….
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