Tx notes fa22 Final

 
 
Example 8 
Gollum bought a ring in July 1994 for £12,000. He transferred it to his civil partner Frodo in 
December 2022 when its market value was £20,000. Frodo then sold the ring in January 2023 for net 
proceeds of £20,000.
Calculate any capital gain for Gollum or Frodo in 2022/23 
4. Part Disposals 
(a)
A chargeable gain may arise is an asset is partly disposed. 
(b)
For example: a taxpayer acquires 100 hectares of land and subsequently sells 40 of those 
hectares. This will give rise to a chargeable gain computed in the normal way, but a specific 
problem arises however regarding what figure of cost should be used in the gains calculation. 
(c)
The cost of the whole asset is multiplied by the following fraction to compute the allowable 
cost of the part now sold: 
where: 
A =
Gross proceeds of part disposed
B =
Market value of the remainder of the asset at time of disposal (this will be given in the 
question)
 
Example 9
 
 
ST owned 10 hectares of land which originally cost £26,000 in March 2019. ST sold 2 hectares of the 
land in December 2022 for £16,000.
The remaining 8 hectares were valued at £34,000 in December 2022.
Calculate the chargeable gain on the disposal of the 2 hectares of land in December 2022


A
A + B

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5. Chattels 
(a)
A chattel is a tangible moveable asset.
(b)
A 
wasting chattel
is one with an estimated remaining life of 50 years or less. These are 
exempt assets. Examples include racehorses, greyhounds (dogs) and yachts (boats).
(c)
There is an exception for plant & machinery on which capital allowances have been claimed, 
these assets are treated as non wasting chattels. If plant and machinery is not covered by the 
non wasting chattel exemption in note (d) below, then a gain would need to be computed upon 
its disposal. Such a calculation is seldom required however as it would normally be sold for 
much less than cost. A capital loss will not however arise in this situation as capital allowances 
will already have given tax relief for the net cost of ownership of the asset.
(d)
A