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1 Brinda purchased an antique necklace for £20000 on 1st october 2001, which she lost on 30 june 2012. she received compensation £45000 from her insurance company on 1 october 2012 and purchased a replacement necklace for £50000 on 1 november 2012. The base cost of the necklace on 1 october 2012 was £21140.
Assuming that Brinda claims the loss of the necklace to be a no gain/no loss disposal, calculate the capital gain arising on the sale the replacement necklace on 1 march 20162 steve acquired a freehold building in may 2011 for £160000. He used 60% of the freehold building in his trade for business purposes. In june 2015 he gifted the building to his son, steven, when its market value was £250000.steve and steven signed an election to hold over the gain arising on the gift.
Calculate the gain held over and the chargeable gain arising on the gift of the building in june 2015Send me your answers to check and / or the part of the model answer that you don’t understand
Just one other thing – check your information for the first question as it cannot be answered with the information provided!
for second question we must use concept assets nots wholly used for trade purposes
relief is restricted where either :
only part of an asset is used for trading purposes
an asset is used for trading purposes for only part of the donor’s period of ownershipIn the second example the gift relief claim is restricted to that part of the gain attributable to the business use of the asset.
The gain is 250,000 – 160,000 = 90,000
Gift relief will be available for the 60% business use of the asset ie 60% x 90,000 = 54,000
leaving a chargeable gain of 36,000
The base cost of the property to the donee will be 250,000 – 54,000 = 196,000
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