22. CGT: Individual relief

Question 1

When must an individual decide which is to be their principal private residence and how?

Answer 1

In writing within 2 years of obtaining second property.

Question 2

What are the rulings for deeming PPRs occupational? (4)

Also, what is the rule regarding some of these?

Answer 2

Unconditional
- Last 18 months treated as occupied

Conditional

• Up to 3 years of absence for any reason
• Any period working overseas for employment
• Up to 4 years of absence whilst working elsewhere in the UK (or 4 years for overseas work is self employed)

Note: conditional rules have to be preceded and followed by periods of actual occupation unless due to employment needing you to work elsewhere in UK.

Question 3

How does business use effect PPR relief?

Answer 3

Relief not available for a part of property used solely for business purposes.

Last 18 months exemption still available if business has in the past been used for non-business purposes, irrelevant of when that was.

Question 4

Letting relief is calculated how?

Answer 4

The lowest of:

• £40,000
• PPR relief given
• Gain relating to the let period

Question 5

What is entrepreneurs relief?

Answer 5

Relief on first £10mil of qualifying disposals to be taxed at 10% for all banded taxpayers.

Question 6

What classes as a qualifying disposal for entrepreneurs relief? (3)

Answer 6

• All or substantial part of an unincorporated trading business
• Assets of a business within 3 years ceasing to trade
• Shares of more than 5% in a personal trading company

Need to have owned assets for min. 2 years

Question 7

When must entrepenurs relief be claimed by?

Answer 7

within 12 months of the 31 Jan following the end of the tax year. i.e. for tax year 19/20 31 Jan 2022

Question 8

What disposals can investors relief be claimed against? (4)

Answer 8

• Unlisted ordinary shares in a trading company (including AIM)
• Subscribed for on or after 17 March 2016
• Held for minimum 3 years from 06th April 2016
• By an individual who is not an employee of the company

Question 9

How much is the investors relief?

Is it an automatic claim?
Is there a deadline?

Answer 9

£10mil but separate to ER

Not an automatic claim, has to be filed by taxpayer 12 months after filing date.

Question 10

How do you go about working about ET relief? (5)

Answer 10

1. Calculate individual disposal gains and losses
2. Separate ER from non ER
3. Deduct AEA and b/f losses from non-ER first
4. Tax ERs first at 10%
5. Tax non ERs
   (Remember to consider tax band rates)