Taxation

Question 1

What is terminal carry-back relief?

Answer 1

Allows a company to offset trading losses against total profit from accounting periods falling in three years prior to the start of the final accounting period, must take later periods first.

Question 2

How to calculate chargeable gains?

Answer 2

Sale proceeds - purchase price - (any acquisition cost, legal fees, disposal costs). = X

Indexation factor x purchase price + (any acquisition cost/ legal fees) = Y

X - Y = chargeable gain

Question 3

How to calculate corporation tax?

Answer 3

Capital gains + trading profit x tax rate = corporation tax liability

Question 4

Is insurance an allowable deduction for CGT purposes?

Answer 4

No

Question 5

What is the effect of roll-over relief on the replacement of business assets?

Answer 5

The gain made from the selling of the business asset is deducted from the acquisition cost of the replacement asset.
(creating a bigger capital gain once the replacement asset is sold)

Question 6

What are the time limits for roll-over relief?

Answer 6

The acquisition should take place within one year before and three years after the sale.