4) UK Taxation 2

Question 1

Exemptions of CGT

Answer 1

• Main private residence subject to private residence relief 🏠
• Property as a result of death (IHT may apply)
• Ordinary private motor vehicles 🚘
• NS&I products and ISA’s
• Winnings from premium bonds or lotto 💰
• Gilts or qualifying corporate bonds
• Personal belongings, antiques, jewellery, other movable objects up to £6k 💍 🖼

Question 2

Calculation of CGT liability

Answer 2

Calculate the amount of gain
Deduct CGT annual exemptions (current £6k)
Deduct any losses that can be offset against the gain
= Taxable gain

Taxable gain + Taxable income to establish rate of CGT
Apply tax at approximate rates

Question 3

CGT rates

Answer 3

Basic rate tax payer: 18% on residential property, 10% on other gains.
Higher/ additional rate tax payer: 28% on residential property, 20% on other chargeable gains.

Question 4

CGT Reliefs

Answer 4

Private residence relief 🏠
Business asset disposal relief
Roll over relief
Hold over relief

Question 5

Exempt from IHT

Answer 5

• Transfers between spouses or civil partners, as long as UK domiciled.
• Small gifts under £250 per recipient each tax year.
• Donations to charity, political parties and to the nation
• Wedding/ civil partnerships 💒 up to £1k (£5k for parents, £2.5k for grandparents or from one spouse/ civil partner to the other)
• upto £3k per tax year for gifts not covered by other exemptions. Any part not used in that tax year can be carried forward 1 tax year, but no further.
• Agricultural property. Relief applies to the land, growing crops and farm buildings. Can be upto 100% for owner occupied or 50% for tenant occupied.

Question 6

IHT Nil Rate Band

Answer 6

NRB £325k
Residents NRB direct descendents £175k

Question 7

Stamp Duty

Answer 7

Payable on paper documents that transfer the ownership of financial assets 📝

Stamp Duty Reserve Tax SDRT
Charged on transfers completed electronically 💻

Stamp duty land tax SDLT
Paid by purchaser of property