PTAX FA15 Task 11 - CGT

dalmatian

Im afraid I dont think i have set myself realistic times for taking this exam, on 17 Dec, as nowhere near ready. Really panicking now. Can anybody help with the calculation on the online practices assessments on AAT website of the PTAX FA16 Sample Assessment 1 - Task 11 ?? Much appreciated. thanks. - clear

PeterC

Are you sure that the exam on 17 December is based on FA16? I thought the first exam on FA16 was on 2nd January.

Looking at the question you mention, you haven't said which part is causing you trouble. Hopefully not all of it. Anyway here is all of it.

The first disposal is between spouses, so it is no gain/no loss. Tax = 0

Marie is a connected person so the gain is
Market value - cost
=20,000 - 8,300
=11,700
less annual exemption of 11,100
=600
taxed at 20% (higher rate taxpayer)
= £120

For Lou the gain is
Proceeds - cost
=42,000 - 20,650
= 21,350
less annual exemption of 11,100
= 10,250

Income is 28,000 leaving 4,000 in the basic rate band, so CGT is

4,000 x 10% = 400 plus 6,250 x 20% = 1,250 total = £1,650

dalmatian

Thank you so much. Sorry ..I'm taking the fa2015 exam but practising with the fa2016. Confusing to say the least!?

jodyewhite

Hello Peter
I am also struggling with this question, thank you for the answer breakdown. Why would we not take into account the other income for Marie and use the market value, but for Lou we would use the other income but the proceeds figure. Also why do we not use the 18% & 28% CGT rate.
Thank you

PeterC

I did take account of Marie's other income of £50,200. That's how I knew she was a higher rate taxpayer.
I used the market value for Marie because she sold to a connected person (her father), Lou did not.
18% & 28% are not the CGT rates for 2016/17

jodyewhite

Hi Peter
Thank you for the explanation, so if a connected person you use the market value and non connected the proceeds.
Thanks

PeterC

You're welcome