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UK Tax – Chattels & Principle Private Residence Exemption

Forums › ACCA Forums › ACCA TX Taxation Forums › UK Tax – Chattels & Principle Private Residence Exemption

  • This topic has 1 reply, 2 voices, and was last updated 9 years ago by twistedheat.
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  • January 29, 2016 at 11:30 am #298459
    anny786
    Member
    • Topics: 10
    • Replies: 23
    • ☆

    Hello Fellow Students 🙂

    Please can anyone kindly sum up the above subject, every time I attempt to study this chapter it just doesn’t make sense, what do I need to be aware of for the exam?

    So far I have….

    – Chattels are tangible moveable property – like jewellery

    What’s a non-wasting chattel?.. also wasting chattels?

    Private residence relief?

    I’m lost clearly— please helppp

    Many thanks in advance 🙂

    January 30, 2016 at 1:18 pm #298549
    twistedheat
    Member
    • Topics: 11
    • Replies: 34
    • ☆

    1. Jewellery / Paintings / Antiques etc are non-wasting chattel

    Calculated by:

    Purchased for <£6000, Sold for <£6000 they are exempt

    Purchased for <£6000, Sold for > £6000 do regular calculation but the gain is limited to a max of 5/3 x (Gross Proceed i.e selling price – 6,000 <– this figure is fixed)

    Purchased for >£6000, Sold for <£6000 i.e a loss, the items DEEMED gross selling amount is £6000 regardless of the amount it was sold for

    Purchased for >£6000, Sold for >£6000 you just do your regular gains calculation

    2. Wasting Chattel

    A wasting chattel is a chattel with a remaining useful expected life of <50 years and is expected to depreciate in value e.g a copyright

    Calculated as:

    Proceeds of sale
    Less depreciated cost (Original cost x Useful life remaining/life remaining at acquisition)

    Example. Copyright had 40 years to expire and purchased for £10,000 on 1.1. 2010. Sold for £20,000 on 1.1.2020.

    Sales Proceed 20,000
    Less:
    10,000 x 30/40 = 7500
    Gain 12500

    Private Residence Relief

    Number of months deemed as living in property / Total months ownership of property x Gain

    You are deemed to live in the property:
    – for the last 18 months no matter what
    – 3 years for any reason as long as you’ve lived in the house AFTER that period you weren’t occupying the house
    – 4 years for working away from home in the UK
    – Any amount of time working abroad

    The rule of having to occupy the house after that “deemed occupancy” is relaxed for the working elsewhere in the UK and abroad IF your employment terms meant you couldn’t move back into your home

    Letting relief

    If you let out your property during your periods that cannot be deemed as occupation, you can claim lettings relief. It is the lowest of:

    Your principal residence relief
    The gain attributable to the time of let i.e period of let/total ownership x gain
    £40,000

    PPR is also limited to the residence part of a home. If you used your home for business use, that part of it will always be taxed and receive no relief EXCEPT for the last 18 months of ownership.

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