Tx notes fa22 Final

Calculate the gain to be deferred and the base cost of new asset. 

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Example 5
 
 
Jerome bought a factory in June 2005 for £680,000. In August 2022 wishing to move to a more 
convenient location, he sold the factory for £800,000. He moved into a rented factory until January 
2023 when he purchased and moved to a new factory.
Assuming that all beneficial claims are made calculate the base cost of the new factory if it 
was purchased for: 
(a)
£750,000 
(b)
£600,000 
4.4.
 
Non-business use 
(a)
Full rollover relief is only available where the asset being replaced (the old asset) was used 
entirely for business purposes throughout the trader’s period of ownership.
(b)
Where this condition is not met rollover relief is limited in proportion to the business use.
(c)
The asset is treated as two separate assets, one that qualifies for relief (the part wholly used in 
the trade) and another that does not.
 
Example 6
 
 
Jake purchased a factory in May 2014 for £540,000 for use in his trade but let out 15% of the 
factory. In July 2022 he sold the factory for £600,000 and bought another factory in June 2022 to be 
used entirely for business purposes for £650,000 and claimed rollover relief.
(a)
What is the chargeable gain arising on the disposal in July 2022? 
(b)