Chapter 13: Companies - Chargeable Gains

Question 1

Indexation

Answer 1

Applied to original cost of asset + legal fees

Separate calculation for enhancement costs

Cannot create / increase a loss - reduce gain down to nil

Question 2

Rollover Relief - Qualifying assets

Answer 2

Land and buildings
Fixed plant and machinery

Question 3

Rollover Relief - obtain 100% relief

Answer 3

100% proceeds must be reinvested into new asset

Question 4

Rollover relief -

1. Calculate gain on sale
2. How much gain can be rolled over - 100% reinvested
3. Base cost of new asset

Answer 4

1. Proceeds less indexed cost = Gain
2. Rollover relief deducted from gain, all gain can be deferred
3. Cost of new asset less rollover relief

Question 5

Less than 100% reinvested - rollover relief

Answer 5

Work out how much has not been reinvested - the lower of this and original gain is taxable now

Difference between the gain and the taxable amount is treated as rollover relief

Question 6

Less than 100 invested - rollover relief

1. Gain on sale
2. How much can be rolled over
3. Base cost of new asset

Answer 6

1. Proceeds less indexed cost = gain
2. Proceeds - reinvested = taxable immediatley

Gain - rollover relief (balancing figure) = chargeable gain

3. New asset cost - rollover relief = base cost