Personal Tax FA2015 - practice exam question 11 - CAPITAL GAINS!
AATiskillingme
Registered Posts: 1
Hi All
i am trying to work through the answers to question 11 on the FA2015 practice paper, for personal tax:
"The capital gains for three tax payers for 2015/2016 are shown below, together with their capital losses brought foward from 2014/2015. Gains are before deduction of the AEA.
Show the extent to which each of the losses brought foward will be relieved in 2015/2016
Taxpayer Gain 15/16 Loss 14/15
Huw £43,800 £35,900
Jason £15,800 £3,900
Matt £9,900 £4,400
We are asked to select for each line, whether the full, some or none of the loss is relieved in 2015/2016
Please help as I cannot figure this one out!!
Thanks
i am trying to work through the answers to question 11 on the FA2015 practice paper, for personal tax:
"The capital gains for three tax payers for 2015/2016 are shown below, together with their capital losses brought foward from 2014/2015. Gains are before deduction of the AEA.
Show the extent to which each of the losses brought foward will be relieved in 2015/2016
Taxpayer Gain 15/16 Loss 14/15
Huw £43,800 £35,900
Jason £15,800 £3,900
Matt £9,900 £4,400
We are asked to select for each line, whether the full, some or none of the loss is relieved in 2015/2016
Please help as I cannot figure this one out!!
Thanks
0
Comments
-
Hi
Basically if there are losses to be used from previous years, you can only use them up to the point that chargeable gains for the year equal the AEA. This is so that the AEA isn't lost.
If gains for the year exceed AEA, then losses from previous years can be offset against the gains, until the gains = AEA. Any unused loss at this point is carried forward to next year.
If gains for the year are less than AEA, then no loss from previous years can be offset, all losses from previous years are carried forward.
I tend to do this in 2 steps:
1) current year gain minus AEA = loss which can be used up. If 0 or negative no loss is relieved.
2) compare loss which can be used up to losses from previous years (2014/15 losses)
Loss which can be used up is larger than 2014/15 losses - all loss is relieved
Loss which can be used up is smaller than 2014/15 losses - some loss is relieved
Huw:
1) 43800-11100 = 32700.
2) 32700 is smaller than 2014/15 loss (35900) = > some loss relieved, 800 worth of losses carried forward.
For Jason:
1) 15800-11100 = 4700 This is more than the loss available.
2)4700 is larger than 2014/15 loss of 3900 => all loss relieved
For Matt:
9900 -11100 = -1200. => negative so no loss can be relieved
It is worth noting that losses from current years must be applied until gains = 0. There is no AEA protection. Any unused current year losses are carried forward to next year, and used up as above.
I hope that makes things a bit clearer, but let me know if not!
Kind regards,
Jyo0
Categories
- All Categories
- 1.2K Books to buy and sell
- 2.3K General discussion
- 12.5K For AAT students
- 319 NEW! Qualifications 2022
- 157 General Qualifications 2022 discussion
- 11 AAT Level 2 Certificate in Accounting
- 56 AAT Level 3 Diploma in Accounting
- 92 AAT Level 4 Diploma in Professional Accounting
- 8.8K For accounting professionals
- 23 coronavirus (Covid-19)
- 272 VAT
- 92 Software
- 274 Tax
- 136 Bookkeeping
- 7.2K General accounting discussion
- 201 AAT member discussion
- 3.8K For everyone
- 38 AAT news and announcements
- 345 Feedback for AAT
- 2.8K Chat and off-topic discussion
- 582 Job postings
- 16 Who can benefit from AAT?
- 36 Where can AAT take me?
- 42 Getting started with AAT
- 26 Finding an AAT training provider
- 48 Distance learning and other ways to study AAT
- 25 Apprenticeships
- 66 AAT membership