Tx notes fa22 Final

 
Example 1
 
 
JM Ltd bought a building for use in the business in October 1994 for £150,000. 
The building was sold in March 2023 for £400,000. 
In June 2022 JM Ltd bought some land for use in the business for £500,000.
Assume an indexation factor of 0.929 from October 1994 to December 2017
Calculate the chargeable gain and the base cost of the new asset.



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Example 2
 
 
A Ltd bought land for use in the business in May 2003 for £200,000. 
The land was sold in March 2023 for £350,000.
In September 2024 A Ltd bought a factory for use in the business for £335,000. 
Assume an indexation factor from May 2003 to December 2017 of 0.543
Calculate the chargeable gain and the base cost of the new asset. 
2. Depreciating assets 
2.1. Definition 
(a)
An asset with an expected life of a maximum 60 years or
(b)
Fixed plant and machinery
Note:
You will only be examined on fixed plant and machinery and leasehold property with a life of 
60 years or less.

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2.2. Effect 
If the new asset is a depreciating asset.
(a)
The gain deferred is not deducted from the cost of the new asset
(b)
Instead it is postponed until the earliest of:
(i)
disposal of the new asset
(ii)
the date the new asset ceases to be used in the trade
(iii)
10 years after the new asset was acquired