Wasting Chattel

System

I'm having trouble when chattels are sold at a loss for less than £6,000.

Generally in what situation you would deem proceeds at £6,000.

Also when to take the gain at 5/3 x (Proceeds-£6,000)???

System

Re:Wasting Chattel

If the proceeds are under £6000 and the cost was over £6000, then you deem the proceeds to be £6000.
The gain at 5/3x(proceeds - £6000) is when the proceeds are over £6000 but the cost was less than £6000.
I hope we get something straightfoward!

System

Re:Wasting Chattel

Wasting, meaning with an estimated remainging useful life of 50 years or less

I'm sure you all know that but its good to know for memo type questions.

Regards

Dean

System

Re:Wasting Chattel

And chattel is a tangible, moveable asset (like a racehorse).

System

Re:Wasting Chattel

To give you an example.
Lets say you bought a chattel for £8,000 and sold it for £3000 you would calculate the loss as follows.
Deemed proceeds £ 6.000 (and not £3000)
less actual cost (£8000)
Loss (£2000)
It basically means that you are not allowed the whole loss if I understand it correctly.
the 5/3 option is as follows.
Suppose gains (after any indexation, but before taper relief) had been calculated on disposals as follows:
Disposal A
Proceeds £9,000
Gain £7,500
the gain would be restricted to 5/3 (9000-6000) = £5000.
The £5000 would therefore be used as the gain figure and taper relief calculated on this amount as normal. So you only get taxed on the £5000 and not £7,500
Now Disposal B
Proceeds £9000
Gain £2,500
Here the gain would also be restricted to £5000. but since the calculated gain is only £2500 the restriction would have no effect. The gain of £2,500 would then be subject to taper relief.
With the deemed proceeds the tax man does not allow you the full loss, but with the 5/3 option you might not have to declare your full gain. I do hope that makes sense. Good luck for tomorrow.
Natascha

System

Re:Wasting Chattel

Been reading out the Osborne book? :P