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Property revaluation

Impact of FRS 102

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Value of property currently on the books  £100,00. Revalued at £175,000. Action as follows. Increase value of property by £75000 and credit to P&L but deduct from profit for purposes of computing CT. Create Deferred Tax Provision for 19% x £75K. Can the increased Reserves be distributed as dividends? 

 

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By paul.benny
08th Oct 2021 13:48

I vote no.
CA2006 s830(2) "A company's profits available for distribution are its accumulated, realised profits..."

Revaluation gains are not realised profits.

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Replying to paul.benny:
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By Paul Crowley
08th Oct 2021 13:59

Agree
Realised being the relevant word

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By qhas
08th Oct 2021 15:08

Thanks

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By Bobbo
08th Oct 2021 17:14

qhas wrote:

Create Deferred Tax Provision for 19% x £75K.

If the property's base cost for tax is 100k...

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paddle steamer
By DJKL
08th Oct 2021 23:27

Agreed, OP also needs to consider any indexation to Dec 2017

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Replying to DJKL:
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By paul.benny
09th Oct 2021 09:02

You're not wrong. But any other deferred tax would presumably already have been accounted for so we're only considering here the additional deferred tax arising from the revaluation.

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Psycho
By Wilson Philips
08th Oct 2021 23:38

19%? What’s the balance sheet date?

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