CGT PPR and Chattels.ppt

CGT Reliefs1PPRandChattels CGT PPR TodaywearegoingtolookatthecapitalgainstaxcalculationsforPrincipalPrivateResidencesandChattelsYourPPRisthedwellingwhichisyouronlyormainresidenceImpliesadegreeofpermanenceCaselawsaid32dayswastooshortOnlyallowedone itisusuallyobvious CGT PPR PrincipalPrivateResidence PPR GainondisposalofPPRisexemptLossnotallowableAllowshouseplusupto hectareofland ormoreif sizeandcharacterofpropertywarrantit Definitionofhouseprovidebycaselaw CGT PPR Periodsofnonoccupation gainceasestobeexemptExemptGainis TotalGainxPeriodofresidenceTotalperiodofownership CGT PPR Deemedperiodsofoccupation a Anyperiodsofabsenceduringwhichownerorspouseemployedabroad b Anyperiodorperiodsofabsencenot 3yearsintotalc Anyperiodorperiodsofabsencenot 4yearswhereownerorspouseunabletooccupybecauseoflocationofemploymentMustoccupybeforeandaftera b cLast36monthsalwaystreatedasperiodofoccupation CGT PPR AboughtahouseinApril1982for 29 000 Alivedinthehouseuntil1May2005whenheboughtanotherhousewhichbecamehisPPR HesoldthehouseboughtinApril1982for 145 000inJanuary2012for 145 000Calculatethechargeablegain CGT PPR Answer CGT PPR Businessuse cannotberesidenceatsametimePeriodlosesCGTexemptionCannotbenefitfromdeemedoccupationexceptlast36months CGT PPR LettingoutpropertyGainattributabletoperiodoflettingischargeableonlytoextentitexceedsthelowerof ReliefattributabletoowneroccupiedcalculationGainarisingduringletperiod 40 000 CGT PPR On1June1985JboughtahouseinStokefor 35 000 HeoccupiedthehouseahisPPRuntil1May1987whenhelefttoworkinBristol livinginarentedflat Hereturnedtothehouseon1November1988andstayeduntil1July1991 whenhelefttoworkinFrance HereturnedtoStokeon1February1994andstayeduntil1December2001whenheboughtanewhouseinDerbyandmadethishisPPR On1February2012hesoldthehouseinStokefor 154 000Calculatethechargeablegainondisposal CGT PPR Howdoyouapproachthiskindofquestion CalculatethetotalgainondisposaltakingaccountofexpensesIdentifyperiodsofoccupationanddeemedoccupation andtotallengthofownershipProratathegainbetweenexemptandnonexemptperiod CGT PPR Answer CGT PPR Answer CGT PPR SupposethatwheneverhewasworkingelsewhereJlethishouseCalculatethechargeablegain CGT PPR Answer CGT PPR MorethanoneresidenceElectforPPRWithin2yearsofacquiringsecondresidenceMustactuallyresideinbothBUTNeednotactuallybeyourmainresidence CGT PPR Planningpoints ElectforpropertywithgreatestgainpotentialasPPR butmustactuallyuseasPPRPurchasenewresidencebeforedisposalofoldTrytoavoidexclusivebusinessuseIfabsentandunabletoqualifyfordeemedoccupation considerletting CGT Chattels ChattelsTangiblemovablepropertyNogeneralexemptionWastingasset predictedusefullifeof 50years eg WastingChattel bothachattelandawastingasset eg Non wastingchatteleg CGT Chattels ChattelsAssetsboughtandsoldfor 6 000orless exemptAssetboughtandsoldformorethan 6 000 computegaininusualwayIfboughtorsoldfor 6 000orless specialrulesapplyIncidentalcostsofdisposalnotincludedwhencalculatingexcess CGT Chattels Chargeablegainrestrictedto5 3ofexcessofdisposalproceedsover 6 000ifthisproduceslowergainWherelossarisesandproceeds 6 000computeallowablelossusingdeemedproceedsof 6 000 CGT Chattels Msellsapieceoffurniturefor 6 360inDecember2011 Hepaysincidentalcostsofdisposalof 320 HeboughtthefurnitureinJanuary1997 Whatwouldbethechargeablegainondisposalifthefurniturehadcost 5 500 4 900 CGTspecialassets InMarch2012Nsells2paintings Eachhadcost 10 000 Sellingpriceswere 7 200 5 700respectivelyCalculatethegain lossoneachdisposal CGT Chattels DisposalofpartofasetEachisregardedasapartdisposalOnlychargeabletoCGTifproceedsofindividualitems 6000AntiavoidanceinplacetostoptaxavoidanceDisposalofaseriesofitemsfrompartofaset tothesamepersonorconnectedpersonsRegardedasasingletransactionAnygainresultingisapportionedbetweentaxyearsifthedisposalstookplaceindifferentyearsNoneedtocalculatethis justbeawareofit CGT Chattels WastingChattelsChattel iemustbetangible movablepropertywithausefullifenot 50yearsisawastingchattelWastingchattelsareexemptExceptionifusedforbusinessandeligibleforCapitalAllowancesWastingassetsarenotexempt CGT Chattels WastingAssets typicallyintangiblesEgshortleasesAllowablecostisrestrictedtotakeaccountofasset snaturalfallinvalueAssumethecostwastesonastraightlinebasisAllowablecostisC P LxC WherePisdisposer speriodofownershipLispredictablelifeCiscostofassetEGFacquireda25yearcopyrightinJanuary2002for 30 000 HesolditinJanuary2012for 35 500 Calculatethechargeablegainondisposal CGT Chattels Practicequestion1In2011 12ataxpayermakesanumberofdisposals HowwouldtheybetreatedforCGTandwhy Anantiquetablesoldfor 5 000Aninvestmentinland cost 2 000 soldfor 6 500Awatercolourpainting Theauctioneerdeductedhis10 commissionfromthesellingpriceandthetaxpayerreceivedproceedsof 5 670Aholdingofsharessoldfor 4 500 cost 7 000A35yearcopyrightAracehorsecosting 75 000 soldfor 100 000Amachineforuseinhistradesoldfor 10 000 originalcost 20 000 CGT Chattels Practicequestion2InOctober2011Ksellsanantiquecabinetfor 7 200 incurringincidentalcostsofdisposalof 200 Thecabinetcost 2 000inJuly1989Computethechargeablegainondisposalbeforeannualexemption CGT chattels Practicequestion3 Sandramadethefollowingdisposals19November2011 agoldnecklacewassoldfor 2 000 IthadoriginallybeenpurchasedinJanuary2000for 7 500whenitwasthoughttobemucholder andthereforemorevaluable 18July2011 anantiquevasewassoldfor 8 450netofexpensesofsaleof 550 Thevasehadcost 3 200inJune2000Calculatetheassessablegain lossbeforeAE Example Practicequestion4InJanuary2002Janeacquiredacopyrightfor 50 000 Thecopyrighthad45yearslefttorun InJanuary2012shesoldthecopyrightfor 40 000 Calculatethegainorlossondisposal Howwouldthesituationhavebeendifferentiftheassetwereplantandmachineryratherthanacopyrightandsoldfor 40 000 PracticeQuestion5Chattels Classifyeachofthefollowingassetsaschattels wastingassetsorwastingchattelsandidentifytheCGTtreatmentDomesticwashingmachineGoldringPersonalcomputer20yearleaseSuitofclothesAntiquevase PracticeQuestion6 InMarch2001Sacquiredamatchingpairofsilvercandlesticksatacostof 4 000 InAugust2011hesoldonetoJfor 6 750whenthevalueoftheotheronewas 5 750 InSeptember2011hesoldtheotheronetoKfor 5 800 CalculatethegainifJandKareunconnected HowwouldthecalculationbedifferentifJ Kweremarried Youarenotrequiredtocarryoutthecalculation Practicequestion7PPR Samanthaboughtahouseon31March1982for 27 000 Shesoldthehousefor 275 000InFebruary2012C