Taxi Driver Online

A license plate is not a wasting asset, in fact it is an accruing asset, therefore unlike a vehicle which is a wasting asset and in most cases would not sell for more than its purchase price, capital gains can be charged on the license plate which would be distinguishable from the value of the vehicle.

Regards

JD

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Even though a plate is normally an appreciating asset if money was lost on one then that would be treated as a capital loss, whereas a car is generally treated as a depreciating asset and thus an allowance is provided against taxable income each year the car is owned.

Thus even if a plate lost value there would generally be no taxation consequences until it was sold, whereas the lost value on a car is allowable for tax purposes each year the car is owned.

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Taxi Driver Online
www.taxi-driver.co.uk

The Finance Act 1965 imposed a tax on capital gains, introducing the concept of a tax based not on income, but the realisation of capital assets.

Capital gains tax is charged on gains accruing from disposals of assets after 6 April 1965, whenever they were acquired.

The legislation relating to capital gains tax is consolidated in the Taxation of Chargeable Gains Act 1992 (TCGA 1992).

Capital gains are chargeable gains, computed in accordance with TCGA 1992, which accrue to a person on the disposal of assets and every gain is a chargeable gain unless there is express provision to the contrary.

The scheme of the legislation is to exclude gains from this broad definition by means of a series of exemptions which variously exclude certain types of gains, assets, disposals and persons. There are also provisions to exclude from the computation of chargeable gains any element which is chargeable to tax as income.

Thus, for a gain or loss to be within the charge to capital gains tax, there must be the following three elements—

(a) a chargeable person to whom the gain or loss accrues;

(b) a chargeable asset; and

(c) a chargeable disposal of the asset.

Regards

JD

I'm not so sure about the income tax route - he could have a fleet of cars and buy and sell quite a few times, but that wouldn't necessarily mean that that's his main business.

Of course, it would depend on all the facts.

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Taxi Driver Online
www.taxi-driver.co.uk

Gusmac made a perfectly valid statement in respect of capital gains tax, yet you cast some doubt on his assumption by stating "when".

Gusmac is no doubt aware that the overall scheme of capital gains tax is that gains on the disposal of assets are chargeable gains unless excluded by an express exemption. It probably hasn't escaped anyone on TDO that your response of "when" is rather incomplete if not meaningless? Therefore I have to ask you under what exemption is income from the sale of a restricted license plate excluded from Capital gains?

Regards

JD

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Well if you don't tell us the later figures then how can anyone work it out?

If it's income tax that's to be paid, then the profit is pretty obvious, but how much he would actually pay in tax would depend on his other income, allowances etc

If that was his only income he would probably pay nothing because his taxable income (profit) would be less than his annual allowance.

If subject to capital gains tax, he would recieve an allowance to update the purchase price (otherwise he might be taxed merely on inflationary gains) and then any gains he made would be reduced by his annual capital gains allowance, which is at least £6k or so, so in view of the figures provided it's likely that no capital gains tax would be paid.

For business assets I think there's also some kind of rollover scheme which means that if the proceeds of a sale are reinvested then the gains would be rolled over to a future tax year.

Defo an area for professionals though.

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Taxi Driver Online
www.taxi-driver.co.uk

Naturally the value in restricted plates fluctuate but regardless of the fluctuation it is still counted as an asset whether it be a gain or a loss?

We should not lose sight of the fact that capital gains tax is charged for a year of assessment on the gains accruing in that year, after taking into account and deducting any and all allowable losses.

Regards

JD

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Definition of assets

All forms of property are assets for the purposes of the charge on capital gains, whether situated in the UK or not, including—

(a) options, debts and incorporeal property generally,

(b) any currency other than sterling, and

(c) any form of property created by the person disposing of it, or otherwise coming to be owned without being acquired.

“Property” means something which is capable of being owned (in the normal legal sense) and does not include, for example, a person's general freedom to trade.

Incorporeal property covers such assets as interests in or rights over property which can be separated from the property itself, for example, leases, milk quotas and the right to occupy a pitch in a betting ring.

Assets include a wide class of rights which need not necessarily relate to other assets. The rights need not be capable of assignment to a third party. An employer's right to the services of his employee under a contract of service is an asset if the employer is able to obtain payment from the employee as consideration for the release of that right; the fact that a right is not assignable and has no market value does not prevent it from being an asset. If an employer is able to obtain a substantial sum for the release of his right to the services of an employee, his contractual right to those services constitutes an asset which the employer can turn to account, even though the circumstances in which he can do so are limited by the nature of the asset.

The sale of an internet domain name is a disposal of an asset for the purposes of capital gains tax and corporation tax on chargeable gains. The exception is where a business deals in domain names as, or as part of, its trade, in which case such sales contribute to its trading profits for income tax or corporation tax purposes.

Business or professional goodwill and copyright are examples of assets which may come to be owned without being acquired.
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Rather than wait for Trevors response in respect of me asking him to substantiate his cryptic reply to gusmac with regard to gusmacs understanding of Capital gains and Vat in relation to a taxi license. I am posting the law in order that Trevor might understand the position in relation to capital gains and VAT.

HMRC state that vehicles outside the exemption of capital gains tax include taxi cabs, racing cars, single seat sports cars, vans, lorries, other commercial vehicles, motor cycles, scooters and motor cycle or sidecar combinations.

However, they also state that a taxi (presumably as opposed to a taxi cab) is not a chargeable asset, ""but the license to operate a taxi, which may be sold with the taxi is a chargeable asset"".

Regards

JD

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Justice for the 96. It has only taken 27 years...........repeat the same lies for 27 years and the truth sounds strange to people!

Glad you asked now eh?

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IDFIMH

I think that about covers it. cheers JD.

A clever accountant could probably make sure you don't pay anything in a case like Mr T's example. On the other hand, I think it would be difficult to avoid paying tax on the disposal of a £60k plate if you spent a lot less or nothing at all to obtain it.
Which brings us back to the question of whether the sales are being declared at all? This would apply all over the country, not just York.
Edinburgh are you listening?

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The point is that we are talking about the person who paid £60,000 for the plate , his own money from redundancy. tax paid, if he sold the plate for 60,000 he would only be getting his own money back , and as for the person that sold him the plate, there is no information.

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Justice for the 96. It has only taken 27 years...........repeat the same lies for 27 years and the truth sounds strange to people!

If there was no gain, then surely it wont be subject to gains tax.

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IDFIMH

In this case there would be no capital gain to pay tax on. I still think it would push him into VAT registration for the 12 months up to the sale. (unless he had very little other turnover)

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