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I believe I may have gap in my understanding if you could please clarify as follows;
If Charles had instead reinvested in a non-depreciating asset ie a Freehold with all numbers and dates the same.
Would the end result still be the same with a CG of £240k due in the FY 20/21 regardless?
The only difference being that rather than the sum of 2 gains (ie £200 + £40k) there would only be 1 gain of £240k being Sell Proceeds of £640k less Cost of £400k (£600k less rollover/deferred gain from prior sale of £200k).
Same same? If so then why segregate as 2 different ways to look at it other than the fact of the 10 year and cease trading consideration vs the must have been owned for 1 year prior to sale?
Mind is all over the place with this section for some reason and just wont click 🙁
Thanks as always
Slight typo in my same same para, meant to say as long as purchased within the 12 month prior to 36 months post.
If a non depreciating asset, say a freehold property, had been purchased then full rollover would indeed have applied and the answer would be as you have described, but if a non depreciating asset had been purchased the gain would only arise when that asset was eventually sold and that might be 10,20, 30 or more years from now!
When a depreciating asset is acquired that means that the gain is deferred – again as you state above – but for a maximum of only 10 years.
Sounds like you understand it pretty well!