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Grant of lease from non wasting interest |
See Also
Assignment of short lease | Chargeable gains summary | Connected party disposals | Disposals | Grant of lease from wasting interest | Notional transfer disposals
Select from the following headings:
Background | Developing the schedule | Completing the Schedule | Standard Sub-Schedules | Carry Forward | Related Errors
This is similar to the Assignment of short lease however where there is a freehold interest or the head lease has more than 50 years to run, the gain is computed according to the part disposal rules (TCGA 1992 Sch 8 para 2).
Original cost | x | Value of part disposed |
Value of part disposed + value of remainder | ||
The value of the remainder includes the rights to receive the rents under the granted lease.
The schedule deals with acquisitions after 6 April 1965 whether pre or post March 1982.
This schedule may be developed from the Capital gains summary, the Connected party disposals schedule or the Notional transfer disposals schedule.
Some of the cells are described in more detail as follows:
Description
A description of the asset should be entered in the cell provided below the schedule title. This will then appear on the Chargeable gains summary schedule.
Expiry date of sub lease
The user must put a note of the expiry date of the lease on the schedule. The software will then complete the Length of sub lease (years) cell, which where the lease is granted for fewer than 50 years, will be used to compute the amount of tax assessable as UK property income and will be excluded from the premium in the chargeable gains calculation (TCGA 1992 Sch 8 para 5).
Original cost/31 March 1982 market value
This requires the user to input the cost of the asset disposed of and the 31 March 1982 value where applicable. These amounts will then be used in the formula to calculate the cost or market value for chargeable gains purposes.
Value of reversion
The value of the remainder should be entered.
Proceeds /Incidental selling costs
Where appropriate the sale proceeds should be linked through as a negative amount from the Fixed asset disposal schedule. Similarly items identified on the income and expense analysis schedules should be linked through into the series of Incidental selling costs cells, which will reduce the disposal proceeds taken into account to derive the Net proceeds figure.
Assessable as UK property income
Where the sub lease is granted for fewer than 50 years, the software will calculate the proportion assessable as UK property income in the current period. This amount will then be deducted from the value of the part disposed in the above formula (numerator only) to derive the relevant acquisition cost, 31 March 1982 value and indexation allowance.
Date of acquisition
The date of acquisition should be entered in the cell below the Date column heading in the format dd/mm/yyyy or mm/yyyy. The software will calculate the indexation allowance based on the Retail Price Index (TCGA 1992 s 53(1)(b)).
Incidental acquisition costs
Costs of acquisition would include professional fees or commissions, costs of conveyancing and advertising costs (TCGA 1992 ss.38(1)(a) & (c)).
Gains rolled in
Enter any gains rolled over into the acquisition cost of the asset in the data entry cell provided.
Where an amount has been reinvested equating to the disposal proceeds less any incidental costs on disposal, any chargeable gain on the old asset is reduced to nil and the base cost of the new asset is reduced by the rolled over gain (TCGA 1992s 152(1)).
Enhancement expenditure
If there has been any enhancement expenditure in the period since acquisition, the user must input details of the amount and the date on which it was carried out (TCGA 1992s 38(1)(b)).
Foreign tax paid
Where this data entry cell is completed, this will enable a Deduct foreign tax selector flag at the foot of the schedule, set by default to 'No', which may be changed in order to treat the foreign tax as a deduction. This can then be used to reduce the gain (TCGA 1992 s 278) or increase the base cost if the gain is rolled over.
A further data entry cell, Foreign tax eligible for credit, will also be enabled.
This schedule does not carry forward.
Error | How to
solve it |
| Not in period! | The date the asset was transferred must be before the end of the accounting period. For FY 2005 files and onwards where the asset was disposed of before the start of the accounting period it is possible to override the error where s.179 TCGA applies by means of a selector on the schedule. |
| Lease expires before disposal date! | The date that the lease is assigned to another party must be before the expiry date of the lease. |
| Gains rolled in cannot exceed cost | Chargeable gains rolled into a new asset must not exceed the total acquisition cost of the asset. |
| Gains rolled in are negative! | Gains rolled into the acquisition of an asset should be entered in the software as a negative number in order to reduce the base cost of the asset. This error can be resolved by clicking the
|
| Acquisition date is pre 31 Mar 1982! Insert market value | The market value as at 31 March 1982 must be entered into the appropriately named cell. |
| Acquired after March 82 | A market value at 31 March 82 has been entered when it is not required (the asset was bought after 31 March 1982). This value should be removed. |
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