- This topic has 4 replies, 2 voices, and was last updated 7 years ago by
.
- Posts
Hello
Kindly help me out with this question
Im getting confused about the calculation of CGT Liability=//=
Mike sold an investment property on 1st Oct 2017 for GBP 700,000. He had acquired the building for GBP 100,000 in Mar 2005 and has extended it at a cost of GBP 20,000 in July 2007.
Mike also disposed of a painting on 1st Feb 2017 for GBP 10,000 incurring auctioneer’s fee of 2%. He acquired the painting for GBP 30,000 in Aug 2006. He has capital losses brought forward of GBP 19,000.
Mike taxable income of GBP 20,000 for the tax year 2016/17.
Calculate CGT payable for 2016/17.
=//=
Taxable gain I calculated: GBP 529,700
Total Capital Gains Tax liability = GBP 104,740
Tax rates used : 10% & 20% [tax year 2016|17]
B.rate limit:
32,000<t.income= 10%
32,000>t.income= 20%*first GBP 12,000 of the remaining basic rate limit taxed at 10% and remaining GBP 517,700 taxed at 20%
good??
Is the investment property commercial or residential? What did the answer show as presumably your answer did not agree?
It has not been mentioned in question whether the inv. property is commercial or residential.
Im having issue with the way CGT is being calculated..
I don’t have the answer so not able to cross check mineFirst advice – don’t do questions for which you don’t have the answers. The ACCA approved providers’ exam kits have hundreds of examples as do their study manuals – all of which have answers that you can check through.
In this example your calculation of taxable gains appear correct assuming that your date for the disposal of the property is a typing error and it should have been October 2016 (?). With the given figure of taxable income and presuming no other information to use there is indeed 12,000 basic rate band remaining to be taxed at 10% with the balance at 20%. If, however the property is residential then the higher rates of 18% and 28% would apply.
- You must be logged in to reply to this topic.