Computing Chargeable Gains (4)

Question 1

Where capital losses arise?

Answer 1

They are set against capital gains in the same tax year

Question 2

If there are insufficient gains to set off against capital losses in year they arise?

Answer 2

Unreleived capital losses are carried forward

Question 3

Which losses are carried forward

Answer 3

Any capital losses brough forward that are unused

Question 4

Do chargeable gains arise with part disposals?

Answer 4

Chargeable gain may arise when an asset is partly disposed

Question 5

When is CGT taxed at 20%

Answer 5

Exceeds £37700

No assets relate to residential property, nor are assets eligible for business asset disposal and investors relief

Question 6

When selling an asset which gives rise to a capital gain?

Answer 6

Trading profit - PA = Taxable income

For BR: £37700 - taxable income. This reduces the BR rate

Question 7

Where is AEA deducted first/

Answer 7

The residential property always takes priority

Question 8

Payment from account?

Answer 8

Deducted from CGT

Question 9

Net capital gains of £5000?

Answer 9

Are covered by AEA

Question 10

Net loss of £3000 in 2022/23?

Answer 10

b/f to 2023/24

Question 11

When current year losses exceed current year gains?

Answer 11

Net current loss is carried forward to offset against future capital gains

Question 12

When residential property is sold?

Answer 12

Must be calculated straight away and payment must be made within 60 days

Question 13

Deductions from payment on account (current)

Answer 13

Any current tax year capital losses prior to property disposal

Question 14

Deductions from payment on account (AEA)

Answer 14

AEA of the tax year

Question 15

Deductions from payment on account (b/f)

Answer 15

Any capital losses b/f at start of tax year

Question 16

Loss if incurred before selling property in payment on account

Answer 16

Is included, if it was done afterwards it is not included

Question 17

Where does AEA go first/

Answer 17

Goes first to whatever has highest rate of tax (e.g. residential property)

Question 18

How is AEA deducted?

Answer 18

Before any b/f capital losses are utilised against current year gains

Question 19

What happens to excess current year capital losses?

Answer 19

Are carried forward indefinitely against current year gains

Question 20

Brought forward losses comes after?

Answer 20

Carried forward and AEA

Question 21

Part disposal calculation?

Answer 21

(Selling / (Selling + MV)) * Original cost

Question 22

Chargeable gain in a transfer?

Answer 22

Proceeds - deemed proceeds

Question 23

Damaged property formula? (when no election made)

Answer 23

Purchase price * (Compensation received)/(Compensation received + Unrestored value of asset)

Question 24

Base cost of restored property formula?

Answer 24

Purchase price - insurance claim +