CGT question help!
yan18
Registered Posts: 19 Regular contributor ⭐
Hi, this Q is from FA2014 Workbook 9(b):
John has a capital loss brought forward of £2,500.
He has taxable income for the year of £25,000.
He sold an asset during the tax year for £21,000.
He had been left the asset when his grandfather died.
His grandfather had paid £6,000 for the asset, and it was valued at £9,500 at the time of death.
Complete the following sentences:
(1) The gain on the asset is ____
(2) The amount of loss that will be relieved is ____
(3) The capital gains tax payable is ____
(4) The loss to be carried forward to the next year is ____
Answers:
(1) £11,500 ---> £21,000 - £9,500
(2) £500
(3) £0
(4) £2,000
Can anyone help to explain the workings for Answers 2, 3 and 4 please?
Many thanks
John has a capital loss brought forward of £2,500.
He has taxable income for the year of £25,000.
He sold an asset during the tax year for £21,000.
He had been left the asset when his grandfather died.
His grandfather had paid £6,000 for the asset, and it was valued at £9,500 at the time of death.
Complete the following sentences:
(1) The gain on the asset is ____
(2) The amount of loss that will be relieved is ____
(3) The capital gains tax payable is ____
(4) The loss to be carried forward to the next year is ____
Answers:
(1) £11,500 ---> £21,000 - £9,500
(2) £500
(3) £0
(4) £2,000
Can anyone help to explain the workings for Answers 2, 3 and 4 please?
Many thanks
0
Comments
-
Hi
It's a while since I studied this and still suffering from post traumatic stress disorder from the PTAX exam
Having said that, my understanding is that the annual the exempt amount (£11,000 in FA2014) is deducted from the gain first, then losses used to bring the gains to zero (so personal allowance is safeguarded):
£11,500 - £11,000 = £500 so only £500 of the loss b/f will be used up and there will be zero CGT payable.
£2,500 - £500 = £2,000 to carry forward.
Hope that helps.
2 -
Thank you so much for your help again!! I seem to keep missing the allowance/exemptions when answering these questions..!wabisabi said:Hi
It's a while since I studied this and still suffering from post traumatic stress disorder from the PTAX exam
Having said that, my understanding is that the annual the exempt amount (£11,000 in FA2014) is deducted from the gain first, then losses used to bring the gains to zero (so personal allowance is safeguarded):
£11,500 - £11,000 = £500 so only £500 of the loss b/f will be used up and there will be zero CGT payable.
£2,500 - £500 = £2,000 to carry forward.
Hope that helps.
Much appreciated ^^!1 -
No problem I'm working on my ICAS report now, so it's good for me to look back and refresh my memory about PTAX.1
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