CGT On Insurance payout?

CGT On Insurance payout?

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Hello there

A client of mine has some rental properties. All small value at £42,000.

One of the properties was badly damaged, he received nearly £18k from the insurance company - only spent £6 on repairing it, as he hires a handy man who is very cheap!

My question is twofold:-

1) Do the insurance monies of £17k and the cost of £5k go into the accounts, giving a taxable income tax profit of £12k? and

2) Do I then need to do a part disposal calculation ? Ive run the figures through, the capital gain would be only £2k ish - but then takes the cost brought forward of the asset down to £25,000.

ANY help on this will be gratefully received as I have never had to deal with insurance payouts before !

Thanks again !

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By George Attazder
12th Oct 2011 14:33

Refer to the manual

http://www.hmrc.gov.uk/manuals/cgmanual/CG15700+.htm

I think your situation falls in the CG15710.  You don't have an income profit though.

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