Corporate Gains - Chapter 13 - 20

Question 1

What are the 3 main exempt assets for chargeable gains purposes?

Answer 1

1. Cars
2. Gilts and qualifying corporate bonds
3. Wasting chattels

Question 2

When is a part disposal “small”?

Answer 2

A part disposal is ‘small’ if both:

• The proceeds of the part disposal are less than or equal to 20% of the value of the land; and
• The total proceeds of all land sales in the year do not exceed £20k

Question 3

What happens to the proceeds after a ‘small’ part disposal?

Answer 3

The proceeds are are deducted from the cost of the land and attract a negative indexation allowance on a future disposal of that land.

Question 4

How is the sale of a long lease treated?

Answer 4

Under normal capital gains rules

Question 5

How is the sale of a short lease treated?

Answer 5

Normal rules except cost is apportioned using the lease depreciation table

Question 6

How is the grant of a long lease treated?

Answer 6

Same rules as a part disposal

Question 7

How is the grant of a short lease treated?

Answer 7

Sales proceeds are the capital element of the premium and are calculated using the following formula: P x 2% x (N-1)

Then treated as a normal part disposal with the sales proceeds on top and full premium below

Question 8

What is a wasting chattel?

Answer 8

A chattel with a life of 50 years or less