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Hi Sir,
I have a question on Wasting Assets topic. BPP Study Text (2016 Edition) page ?208)) says that when a wasting asset is disposed of its cost must be depreciated over its estimated useful life. Then it also states that if capital allowances have been given on a wasting asset its cost is not depreciated over time. Can you please explain how to calculate CGT under the second case??? There is no example in the book. Thank you very much beforehand!
I do not have the BPP study text or material. I would advise you firstly learn what is in the OT course notes and lectures to give yourself the opportunity to pass the exam, as we do not attempt to include every possible detail.
Capital allowances are given on plant and machinery and a capital gain would be computed in the normal way if an item of plant or machinery was sold for more than cost which is of course very unlikely.
It is more important then to know that when such an asset is sold for less than cost that no capital loss will arise as the taxpayer has already achieved tax relief for this loss through the capital allowances system
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