IT or CGT?

IT or CGT?

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A sole trader sold fixtures & fittings used in his trade for several years at a value substantially in excess of origianl cost. Is the gain chargeable under Income Tax or Capital Gains tax provisions?
Fixed Assets

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By User deleted
16th Jun 2008 15:56

Fixtures & Fittings
Thanks for the reply Chris. The situation is complicated- the F&F cost £10,000, NBV at date of sale was £2,000, but solicitor drafted contract to sell the F&F for £150,000! The solicitor wants to know the extra tax payable for PI purposes. Is (a) Income tax payable on the diff £150k less £2k or (b) Income tax payable on diff between £10k and £2k plus CGT on diff between £150k and £10k?

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Chris Caspell CTA TEP
By ccaspell
16th Jun 2008 12:54

Bit more info needed, but generally...
(1) Capital allowances will not affect the capital gain calculation (as full cost not nbv would be used in the CGT calculation);

(2) If the plant & machinery is moveable rather than fixed (which by the sound of it, some of it might be) then there is no chargeable gain if it is sold for £6K or less and where sold for more, the gain cannot exceed 5/3 of the excess of the proceeds over £6K.

Take a look at TCGA '92 - ss41 & 55 for more info.

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