Osborne 4 - Chargeable gains Flashcards
Share matching rules for:
Bonus shares
For matching Treat as if acquired at same date as original shares that generated the issue.
So add to pool by:
* New line with bonus issue date and number of shares…. cost and indexed cols leave blank.
They only come into play when calculating the proportion of shares sold to then use as a multiplier on the indexed cost.
Share matching rules for:
Rights issue
For matching purpose shares bought in this way are treated as if bought with the original shares.
But other than matching they are treated like any other purchase:
Add to the pool & Indexing will only apply from date they were paid for.
If sell an asset at a gain, what do you do regarding the capital allowance computation?
You deduct the (lower) original cost from the capital allowance computation not the (higher) disposal proceeds ….
makes sense … if you used the proceeds you’d be deducting more than you claimed in the first place.
when calculating chattel restriction on gain how do you do this
work out the unindexed gain
then work out the index allowance and deduct
work out the chat.restr. as 5/3 of the gain above 6000 ignoring indexing.
compare
Exempt
Trading inventory
Cars
Chattels bought & sold for £6,000 or less
Government securities or ‘Gilts’
Animals
Proceeds on diposal
The amount sold for except:
If asset given away.
Sold to connected company or person for less than MV
Companies under the same control are connected with each other and with the person(s) controlling them.
If lost or destroyed then zero unless insurance in which case insurance proceeds
How to calculate indexation factor - just in case!
Basically:
RPI at Disposal Date - RPI at Acquisition date
__________________________
RPI at Acquisition date
ROUNDED to 3 DECIMAL PLACES
In other words bring the original cost to todays price:
Increase in RPI
___________ x Original cost
Original RPI
But you modify Disposal date to December 2017 if it’s later since Indexation allowance was ‘frozen’
what to remember about indexing
It cannot create or increase an unindexed loss.
So you do the unindexed gain calc. first.
Restrict the Indexation allowance to the gain if appropriate.
When dealing with improvement expenditure.
Don’t count it in the cost - its a separate line in the calc. ‘Improvement expenditure’
Must be capital in nature.
‘polishing pivots’ was apparently not.
I think ‘having an antique professionally restored’ would be… will just have to make a call since the AAT practice had the pivot polishing example it may not be ‘obvious’ … clearly can’t assume
.
When using the 5/3 rule for selling chattel over 6K do yu include incidentals?
No.
Its 5/3 (proceeds - £6K)
Proceeds is gross proceeds before deduction of incidental costs of disposal
Matching rules for shares (companies)
- Any bought same day
- Any bought in the 9 days before the disposal.
- FA 1985 pool
Categories of assets for rollover relief
- Land & buildings
- Immovable Plant & machinery
- Ships, aircraft, hovercraft.
Working in conjunction with indexing:
Proceeds x
Less cost (x)
Less indexation (x)
= Chargeable gain
Then work out if any gain is chargeable now.
This is the difference between proceeds and the cost of the new asset if the new asset is less.
Deduct this from the Chargeable gain to get the rollover amount.
Then deduct the rollover amount to reduce the cost of the new asset in it’s Chargeable gain calc.
Bonus and Rights shares are treated as acquired at the time of the shares they derive from for Matching purposes.
.
Capital losses must be first set against current CAP then carried forward against the next available Chargeable gain
.
Net proceeds
The proceeds less incidental costs of selling the asset
This is the subtotal BEFORE indexation allowance is deducted
