ACCA TX-UK (F6) - Taxation Course - ACCA TX Course - Chapter 15: Chargeable Gains - Rollover Relief (Question Explained)

RESOURCES & LINKS Taxation (UK): https://www.gotitpass.com/tx Got It Pass: https://www.gotitpass.com Find me on Facebook: https://www.facebook.com/GotitPass In Chapter 15, the focus is on rollover relief in Capital Gains Tax (CGT), which is crucial for success in understanding CGT concepts. The examiners know students often struggle with reliefs, making it an important topic to grasp. Rollover relief involves two assets where a gain from the first asset is deferred and rolled into the cost of the second asset. To apply this relief, the assets must meet certain conditions, including the timing of the sale and use in trade. The requirement is to calculate chargeable gains for an individual named Graeme for the tax years 2018-19 and 2023-24, taking rollover relief into account. In September 2018, Graeme sold a freehold office block for £12,500, having used it in his trade and it being a qualifying asset. The gain from this sale can be calculated since the costs are known. Also, prior to the sale, in July 2018, he purchased a freehold factory for £1. 4 million and sold it later for £1. 5 million. The rollover relief applies since the sale of the first asset and the purchase of the second asset fall within the specified time frames. Here, the gain on the first asset gets deferred, impacting the computation of the cost basis for the second asset when sold. If all proceeds from the first sale are reinvested, complete rollover relief can be claimed. If not all proceeds are reinvested, the relief may be limited, affecting the calculation of chargeable gains. The second part of the calculation involves the sale of the second asset, where the rolled-over gain reduces the cost, leading to a higher chargeable gain when it is eventually sold. Overall, understanding these concepts and their applications in calculations is essential for proper CGT management. #acca #taxation #accatx #accacourse #accatraining #accaexam #accounting #uktax #uktaxation #capitalgaintax #CGT #rolloverrelief