Corporate Capital Gains

Question 1

Rollover relief - what happens if the full proceeds of sale are not reinvested?

Answer 1

The cash not reinvested is taxable immediately

Question 2

What if a building is used partly for business and partly for investment purposes?

Answer 2

The rollover relief is apportioned based on the % of business use

Question 3

What if a building is sold that was used partly for business - how do we work out the proceeds reinvested?

Answer 3

We work out the business apportionment and multiply this by the total amount sold.

Question 4

What is a wasting asset?

Answer 4

An assest with a useful life of less than 50 years

Question 5

What is a depreciating asset?

Answer 5

A wasting asset or an asset which will become a wasting asset within the next 10 years - therefore has a useful life of no more than 60 years.

Question 6

Can we rollover the gain of a depreciating asset?

Answer 6

NO, it is frozen

Question 7

We invest £180,000 of £200,000 proceeds into a depreciating asset. The gain is £80,000. How much is chargeable?

Answer 7

£20,000 is chargeable now (the proceeds not invested) and the remaining £60,000 is frozen

Question 8

When does a gain crystalize?

Answer 8

Earleir of:

The depreciating asset is sold

Company stops using the asset in its trade

10 years after acquisition of the asset

Question 9

What are the matching rules for companies shares?

Answer 9

1. Same day
2. Previous 9 days, fifo
3. Remaining shares from 1/4/82 to 9 days previous are pooled in a Section 104 pool, working out indexation allowance for each share purchase as you go along.

Question 10

When does indexation stop?

Answer 10

After 1/1/2018

Question 11

How long do you have to purchase a new asset to claim rollover relief?

Answer 11

4 years from the end of the accounting period in which the new asset is purchased.