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Tax Compliance Revision > Capital Gains > Flashcards

Capital Gains Flashcards

(49 cards)

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1
Q

What relief can both individuals and companies receive?

A
  • Rollover & holdover reliefs.
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2
Q

What reliefs can only individuals receive?

A
  • Gift relief
  • BADR
  • Investors’ relief
  • Private residence relief
  • Letting relief
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3
Q

What is the lifetime limit on BADR?

A

£1 million.

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4
Q

What does the arising basis tax on capital gains?

A

Worldwide gains.

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5
Q

What does the remittance basis tax on capital gains?

A

UK gains and on foreign gains when they are remitted to the UK.

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6
Q

Is someone who is not resident taxed on overseas gains?

A

No.

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7
Q

When using the remittance basis, is AEA applied?

A

No.

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8
Q

If there is no double tax treaty, what relief is applied?

A

DTR.

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9
Q

How is DTR calculated?

A

It is the the lower of:
- overseas tax paid on the gain
- UK tax on the gain

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10
Q

When DTR is involved, what gains are the AEA and BRB first applied to (UK gains or overseas)?

A

UK gains.

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11
Q

When non-UK residents are taxed on UK residential property disposals after 5 April 2025 - what are the 2 things we do?

A

1) The acquisition cost is replaced by the market value at 5 April 2015.
2) The gain can be calculated as normal (using the original cost as acquisition cost) then time-apportioned for the period after 5 April 2015.

The lower gain is then selected to be taxed.

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12
Q

From 6 April 2019, how are non-UK residents subject to UK capital gains tax on non-UK residential property?

A

If the non-UK residential property/assets derive 75% of their value from UK property.

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13
Q

How is private residence relief (PRR) calculated?

A

Total gain x (exempt months/total months of ownership)

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14
Q

When applying PRR to non-UK residents with UK residential property, when does the period of ownership start?

A

5 April 2015.

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15
Q

In regards to PRR, what are the periods of non-occupation that are deemed as occupation?

A
  • Up to 3 years of absence for any reason
  • Any period spent working abroad
  • Up to 4 years of absence whilst working in the UK
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16
Q

Does the individual benefit from letting relief if they let their residence during their period of absence?

A

No.

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17
Q

Can an individual have another private residence during periods of deemed occupation (relating to PRR)?

A

No.

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18
Q

Letting relief is the lowest of…?

A
  • £40,000
  • the PRR given
  • gain after PRR x chargeable months due to letting
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19
Q

What is “No Gain/No Loss” (NGNL)?

A

It’s where a transfer between spouses/civil partners occurs. The sale proceeds are deemed the same as acquisition cost so there is no capital gain.

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20
Q

What is considered a ‘connected person’?

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A
  • Spouse or civil partner
  • Relatives (brothers, sisters, ancestors and direct descendants) and their spouses or civil partners
  • spouse’s or civil partner’s relatives and their spouses or civil partners
  • business partners and their spouses or civil partners and relatives
21
Q

For a disposal between a connected person (not covered by NGNL - direct spouse or civil partner), the deemed proceeds are…?

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A

The market value at date of disposal.

22
Q

Can a loss disposal between a connected person be relieved against other disposals?

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A

NO! They can only be relieved on future disposals between that specific connected person in the same or future tax years.

23
Q

When there is part disposal, how do we apportion the original cost?

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A

Original cost (incl. any legal fees relating to the acquisition) x (Market value of part disposed / Market value of part disposed + market value of part retained)

24
Q

Is stamp duty deductible from capital gains?

25
What is gift relief available on?
- Unquoted trading shares/securities - Assets used in trade of the donor or the donor's personal company - Quoted shares/securities of donor's personal company, where it is a trading company.
26
Are cars taxed?
No - unless they have been used for business.
27
Does the remittance basis charge (RBC) apply to capital gains tax?
Yes - same rules as income tax (£30,000 for being resident 7 out of 9 last tax years, £60,000 for being resident 12 out of 14 last tax years).
28
If you are UK-resident - you pay tax on...?
Worldwide gains.
29
If you are non-UK resident and non-domiciled, you pay tax on?
CGT on UK residential property owned after 5 April 2015 or non-residential non-UK property if it derives 75% or more of its value from UK property.
30
For PRR on residential property after 5 April 2015 (non-UK residents), how many nights must one spend for actual period of occupation to be exempted from the gain?
- 90 or more nights spent int the UK (3 months) - If 90 or more nights spent means that the actual period of occupation can be exempted. - If less than 90 nights then it is deemed as no occupation.
31
Does the 9 month rule PRR still apply if the residence was once but no longer occupied by the owner?
Yes.
32
What 3 conditions must be met for investors' relief to apply?
- Unlisted ordinary shares SUBSCRIBED (i.e. newly issued shares in a TRADING company) - Which have been held for a minimum of 3 years - By an individual who is not an employee or officer of the company
33
CGT on land can be payable in equal instalments paid over 10 years but with...?
Interest.
34
When a company ceases to be an individual's personal company, what must be calculated that can benefit from BADR relief?
- A notional gain - this is calculated at the point where the company ceased to be an individual's personal company. The proceeds would be what the new shares were issued for at that specific date. - This notional gain is added on top of the actual gain on shares when disposed of. - The acquisition cost becomes the market value at the date where the the company ceased to be an individual's personal company when the shares are disposed of.
35
What are qualifying disposals for BADR?
- all, or substantial part of (capable of independent operation), an unincorporated trading business - assets of a business within three years of ceasing to trade - Shares in a personal trading company where the individual is an employee or officer of the company.
36
A personal trading company is one in which the individual...?
- owns at least 5% of the ordinary share capital, giving them at least 5% of the voting rights, AND - is entitled to at least 5% of the profits available for distribution and 5% of the distributable assets on a winding up, OR - is entitled to at least 5% of the proceeds in the event of a company sale
37
How long must qualifying assets for BADR have been held for?
At least 24 months,
38
When must BADR be claimed?
Within 12 months from 31 January following the tax year in which the disposal was made.
39
What was the annual exemption allowance in 2023/24?
£6,000.
40
When is CGT due?
31 January following the tax year.
41
Gift relief is restricted to (total gain x chargeable business assets (CBA) / chargeable assets (CA) - can you give me examples of CBA & CA?
- CBA - Market value of chargeable assets used in trade such as land and buildings & plant and machinery > £6,000. - CA - Market value of chargeable assets not used in trade such as investments.
42
Are net current assets chargeable assets (for gift relief calculation)?
No.
43
How does rollover relief affect base cost?
It is deducted from original cost when the asset that received rollover relief is disposed of.
44
What are qualifying assets for rollover relief?
- Goodwill (goodwill for companies does not count) - Land and buildings (occupied and used for trade purposes) - Fixed plant and machinery i.e. not moveable - Ships, aircrafts and hovercrafts - Satellites, space stations and spacecrafts
45
Any capital expenditure can be...?
Deducted from sale proceeds i.e. extensions.
46
When cash is kept after a disposal, under rollover relief, how is the gain calculated?
Sale proceeds - base cost (original cost - rollover relief).
47
Are disposals to registered charities, exempt?
Yes.
48
What is the lifetime limit on investors' relief?
£10 million.
49
Shares held in an ISA are...?
Exempt disposals.

Tax Compliance Revision (14 decks)

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