Personal Tax Special rules chattels/Osborne

reddwarf
reddwarf Registered Posts: 528 Epic contributor 🐘
in AAT Level 4 (Level 8 in Scotland)
The rules are 'sold for a gain over £6000' then gain limited to 'proceeds - 6000 x 5/3' if the answer is lower than actual gain, then subsitute answer for the gain.

Why is this rule not applied to question 7.2 on Bertie's antique painting. I can only think it may be because it's not a 'wasting chattel' but the special rules don't say 'special rules for wasting chattels'??

Question : Bertie sold antique painting for £20000, bought in 92 for £5000, restored Jan 95 at cost of £6000.



Also if you have costs for disposal such as auctioneers fees do you deducted them from proceeds in 'chattels sold at a gain for over £6000' and from the deemed proceeds (£6000) in 'chattels sold at a loss for less than £6000'.

Our lecturer was rather hazy on this!

Anyone?

thanks

Comments

  • reddwarf
    reddwarf Registered Posts: 528 Epic contributor 🐘
    Opps answered this one !!!- gain would be £23333.33 if 20000 -6000 x5/3 so the lower(actual) gain is applied of £9000.

    Still have the questions re the costs on disposal if anyone can oblige?

    thanks
  • Cyfarthfa
    Cyfarthfa Registered Posts: 62 Regular contributor ⭐
    Hi Redwharf,

    In relaton to the first part - correct me if I am wrong but the cost would be the 5k plus the 6k so as both proceeds and cost are over £6k then you would just treat capital gains in normal way and the 5/3 rule would not apply??

    In relation to the 2nd bit I've got no idea, just about to start revising but i'd be interested in the answer as for some reason these chattels are driving me insane along with PPR!
  • Cyfarthfa
    Cyfarthfa Registered Posts: 62 Regular contributor ⭐
    I've checked in the kaplan book and if proceeds are less than £6k you deem them at 6k and then deduct selling costs.

    I can't find anything relating to if proceeds are over 6k and it cost less than £6k. However, I am assuming that as it says 5/3 x (sale proceeds - £6k) I'm assuming that you don't deduct selling costs as it would be net sale proceeds otherwise.

    Be good for someone to confirm this.
  • reddwarf
    reddwarf Registered Posts: 528 Epic contributor 🐘
    This came up at college and my colleague thought the rule of 'sold at a gain for over £6000 should apply' - but even if you apply this rule the answer is the same as if not! So that's kind of reassuring.

    Agree Cyfartha, it would be good to have the gain over £6000/cost issue clarified - this is where I tutor was unsure...

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