Osborne Books (Workbook - AQ16) Practice Assessment 1 Task 11 - CGT

adilosmanadil
adilosmanadil CyprusAATQB Posts: 6
edited September 28 in Personal Tax
I am really struggling to understand the answer to the following question -

Taxpayer : Alison
Sold To : Friend
Proceeds : £33,000
Market Value : £25,000
Cost: £13,500
Other Taxable Income : £33,000
What is the CGT = ?

The answer is £990 but I have no idea how that figure has come about. Any assistance would be much appreciated.
AAT
Level 2 Certificate in Accounting - May 2021
Level 3 Advanced Diploma in Accounting - Aug 2021
Level 4 Professional Diploma in Accounting - in progress
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Best Answers

  • Pian32
    Pian32 MAAT Posts: 461
    Accepted Answer
    So you have a couple of different steps:
    1st you need the amount that can be taxed:

    Proceeds £33,000
    Cost £13,500

    Gain 19,500

    Less AEA - 12,300

    Chargable amount 7,200

    Next you need to work out under which rate the tax will be charged. Lower =10% Higher = 20%

    Lower band remaining = 37500 - 33000 = 4500 @ 10% = 450
    Higher rate = (7200-4500) = 2700 @ 20 % = 540

    Total tax = £990
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  • adilosmanadil
    adilosmanadil CyprusAATQB Posts: 6
    Accepted Answer
    @Pian32 Thank you very much :)
    AAT
    Level 2 Certificate in Accounting - May 2021
    Level 3 Advanced Diploma in Accounting - Aug 2021
    Level 4 Professional Diploma in Accounting - in progress
    AATQB - Aug 2021
    MAAT - in progress
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