Capital Gains Guidance Required

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sezzle
sezzle Registered Posts: 2 New contributor 🐸
in General accounting discussion
Hi Everyone

I am currently studying Self Assessment Tax Returns and after many hours trying to ascertain the correct action in respect of the following Capital Gains question that I have been set I would very much like to request guidance before my brain explodes.

Scenario
A client purchased a MG sports collectors vintage car 3 years before May 2008 for £15K and considered selling in in the 10/11 tax year for £23K - I have been asked to calculate the Capital Gains due and complete a Capital Gains Summary form had the client sold the car in 2010/11.

Initially, I had submitted a calculation and completed the form showing the amount due after the annual exemption had been deducted however I have had this returned stating that I have overlooked a point of principal

Since receiving this back I have undertaken further research and believe that as a vintage car would be classed as a wasting asset and would be exempt from CGT

Firstly - could anyone please confirm if I have the correct thinking on this considering I had been asked to show the calculation and complete a Capital Gains summary form

Secondly - as the information supplied specifically said that the car has been purchased 3 years before May 2008, is this a date of any significance to my answer to be based?

Any guidance would be very much appreciated to assist with my thought process

Many thanks in advance

Comments

  • clegganator
    clegganator Registered Posts: 184 Dedicated contributor 🦉
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    I can confirm that a car would be exempt from capital gains. Not sure what else to say as that means there's no need do a CGT comp and summary.
  • MarkT
    MarkT Registered Posts: 302
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    I too can confirm this is a trick question. Reason being is that there's no such thing as an MG being worth anything near £15k let alone £23K :lol:
  • clegganator
    clegganator Registered Posts: 184 Dedicated contributor 🦉
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    MarkT wrote: »
    I too can confirm this is a trick question. Reason being is that there's no such thing as an MG being worth anything near £15k let alone £23K :lol:

    Bazinga!
  • sezzle
    sezzle Registered Posts: 2 New contributor 🐸
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    Ha Ha! Thanks for your comments. Trick questions should most definately been banned!!!
  • AK002
    AK002 Registered Posts: 2,492 Beyond epic contributor 🧙‍♂️
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    As said, trick question.
  • jamesm96
    jamesm96 Registered Posts: 523
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    clegganator wrote: »
    Bazinga!

    Haha, we love that show!

    Back to topic, though, as everyone has now pointed out, private cars are exempt from CGT. I suspect the question says it was bought three years prior just to highlight the fact that it is a personal car. If he were a motor trader then there would be income tax implications (though still no CGT issues) but if you buy a car for trading purposes you don't keep it for three years!

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