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- April 2, 2019 at 3:20 pm #511056
Thanks – There are a few examples like this throughout BPP 17/18 Page 424 Question 88 Peter, bought vase £12k, insurance paid out £20k and he bought new one for 17k. Area was Testing Rollover relief on destruction of assets. In this example the answer was
Proceeds received £20,000
Less Cost £12,000
Gain £8000 (5k rolled over, 3k subject to immediate CGT)gain immediately chargeable was £20000 -17000 = 3000 ins proceeds not used.
The base cost of the new vase for any further sale (rollover relief) was then deemed to be £17000 – 5000 = £12000.
The reason I asked about Plant in particular, was the amount that would be shown in the asset register as cost would be the amount that attracted AIA and where the cost figure would be historically kept so that any future gain on sale could refer to. If it were showing 17000 in asset register and not 12000 I foresaw issues.
If we put 17k cost in asset register, when will the 5k gain we have received ever be subject to CGT?
Going back to my original question, i see the double entry as: –
Original Purchase db assets 20k,
Dep/Capital allowance cr depreciation 20k (presuming fully depreciated)
Reverse the above to dispose of upon destruction.
New asset purchase db assets 25k (which we will claim AIA on)
Bank (insurance payout) cr 25kIn my example, when will the 5k gain ever be realised and subject to CGT if we dont reduce the base cost of the replacement in the asset register and for AIA calculation.
Help please as really confused. Do we keep separate records for CGT calcs outside of the usual asset register?
April 2, 2019 at 2:08 pm #511052Thanks for feed back, The lectures are fab. I was going to take exam in March 2019 and planned on doing a revision of all new rates before the June exam, hence using rates applicable for March 2019 exams.
So supposing I substitue above the 8164 with 8424 instead, it would be helpful to know the principle that allows the NI free rate to be pro rated in one instance, but not in the other. I just see a danger where the 8424, could actually be abused. EG the person setting up business could already have claimed 9 months of this 8424 (pro rated) as an employee and then receive £8164 in total against self employed earning of 3 months.
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