Help... Business Tax chattel question
Paisley
Registered Posts: 93 Regular contributor ⭐
I have a question from the Osborne textbook:
Trevor Ltd sold a valuable picture for £12,000 in November 2009. This was bought for £4,000 in August 2000. The indexation factor from August 2000 to November 2009 was 0.270.
Answer:
Proceeds: £12,000
Cost: (£4,000)
Indexation allowance: (£1,080)
Gain: £6,920
Chattel restriction on gain: £10,000
No problem up to the £6,920 gain, but where has the £10,000 chattel restriction come from? Plus - state whether the chattel restriction will have any effect on the original gain?
Any help would be appreciated!
Trevor Ltd sold a valuable picture for £12,000 in November 2009. This was bought for £4,000 in August 2000. The indexation factor from August 2000 to November 2009 was 0.270.
Answer:
Proceeds: £12,000
Cost: (£4,000)
Indexation allowance: (£1,080)
Gain: £6,920
Chattel restriction on gain: £10,000
No problem up to the £6,920 gain, but where has the £10,000 chattel restriction come from? Plus - state whether the chattel restriction will have any effect on the original gain?
Any help would be appreciated!
0
Comments
-
if you read on you'll see that chattels sold for a gain over £6000 are deemed proceeds of £6K
Proceeds limited to £6000 x5/3 = £10000
it won't affect he0 -
I remember chattel rules by remembering this table-
Bought For Sold For Action
< £6000 < £6000 Exempt- no Capital Gains
< £6000 > £6000 Gain limited to 5/3 x (Proceeds less £6000)- use lowest figure
> £6000 < £6000 Loss limited by Proceeds deemed as £6000- ie £6000 less cost
> £6000 > £6000 Normal Capital Gains Rules (Proceeds less Cost)
Hope this helps!0 -
I remember chattel rules by remembering this table-
Bought For Sold For Action
< £6000 < £6000 Exempt- no Capital Gains
< £6000 > £6000 Gain limited to 5/3 x (Proceeds less £6000)- use lowest figure
> £6000 < £6000 Loss limited by Proceeds deemed as £6000- ie £6000 less cost
> £6000 > £6000 Normal Capital Gains Rules (Proceeds less Cost)
Hope this helps!
Very useful Yoelle. Thanks for sharing0
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