Chapter 19 - Rollover Relief and Depreciating Assets

Question 1

Depreciating Assets

Answer 1

For CGT purposes a depreciating asset is one with a useful life not exceeding 60 years, ie any wasting asset is classed as a depreciating asset too.

Question 2

Examples

Answer 2

Most common:

• Leases of 60 years or less; and
• Fixed plant and machinery

Question 3

Note

Answer 3

Where some fixed plant or machinery has become part of the fabric of the building (e.g lift), the cost is treated as expenditure on the building itself

Question 4

Purchase of a Depreciating Asset

Answer 4

Where the replacement asset is a depreciating asset, we do not take the gain on the original asset and roll it over against the base cost of the replacement. Relief is given by freezing the gain on the old asset for a certain period

Question 5

Crystallising the Gain

Answer 5

The frozen gain crystallises at the earliest of:

1) sale of the depreciating asset
2) ceasing to use the depr asset for trade purposes
3) 10 years from acquisition of the depr asset