BLM72065 - 鈥橧ncome-into-capital鈥� schemes and back loaded leases: Relief for set-offs against rentals: cumulative accountancy rental excess: example 3
Example
Example 1 in BLM72030 shows the cumulative accountancy rental excess brought forward and set off during the first 6 years of a lease. If in Example 1 the leased asset was sold by the lessor for 拢25,000 at the end of period 4 the cumulative accountancy rental excess (鈥楥ARE鈥�) of 拢1400 brought forward at the beginning of that period is first reduced by the 拢200 set against normal rent for the period (see below) and only the balance of 拢1200 set off in the capital gains computation.
| Period | 鈥楴ormal rent鈥� | 鈥楢ccountancy rental earnings鈥� | Taxable before relief for cumulative accountancy rental excess b/f | Relief for cumulative accountancy rental excess b/f | Taxable after relief for cumulative accountancy rental excess b/f | Cumulative accountancy rental excess b/f |
|---|---|---|---|---|---|---|
| 1 | 500 | 1200 | 1200 (ARE) | Nil | 1200 | 700 |
| 2 | 800 | 1300 | 1300 (ARE) | Nil | 1300 | 700+500=1200 |
| 3 | 1200 | 1400 | 1400 (ARE) | Nil | 1400 | 1200+200=1400 |
| 4 | 1700 | 1500 | 1700 (NR) | 200* | 1500 | 1400-200=1200 |