Capital Gains Tax

Question 1

Capital Gains Tax: Scope

Answer 1

Charged on:
Gains arising from
Chargeable disposals
Of
Chargeable assets
By
Chargeable persons

Question 2

CGT: Chargeable persons

Answer 2

Individuals and companies
But companies pay CT on gains not CGT

(So individuals?)

Question 3

CGT: Chargeable disposals include:

Answer 3

1. Sale
   Or gift
   Of
   Whole
   Or part
   Of an asset
2. Loss
   Or total destruction
   Of an asset

Question 4

CGT: Chargeable disposals don’t include:

Answer 4

1. Gifts to charities
2. Disposals on death
3. Disposals between spouse/civil partners

Question 5

CGT: For disposals under contract: Date of disposal is: Contract not conditional

Answer 5

When the contract is made

Question 6

CGT: For disposals under contract: Date of disposal is: Contract is conditional

Answer 6

Date when all conditions are met

Question 7

CGT: Which assets are chargeable?

Answer 7

All

Unless specifically exempt

Question 8

CGT: Exempt assets include:

Answer 8

Cash
Motor cars (Incl vintage)
Gilt edges securities
Qualifying corporate bonds
National savings certificates
Premium bonds
Prizes and bettings winnings
Assets in ISAs
Certain types of chattels

Question 9

CGT: Annual exempt amount

Answer 9

£12,300

Question 10

CGT: Can annual exempt amount be brought/carried forward

Answer 10

No

Question 11

CGT rate depends on

Answer 11

Individual’s TAXABLE INCOME

Question 12

CGT rate: Higher/Additional rate taxpayers

Answer 12

20%

Question 13

CGT rate: Basic rate taxpayers

Answer 13

10% on gains
Falling within the unused basic rate band

20% on the excess

Question 14

How you can calculate any unused basic rate band?

Answer 14

The difference between:
Taxable income
And basic rate band limit

Question 15

CGT assessment method

Answer 15

Self assessment

Question 16

CGT: Deadline

Answer 16

31 Jan
Following end of the tax year
(Self-Assessment return date)

Question 17

CGT: Disposal of a single asset proforma

Answer 17

Disposal consideration
Less: incidental costs of disposal

Less: Allowable costs
Cost of acquisition
Incidental costs of a acquisition
Enhancement expenditure

Question 18

CGT: Chargeable gain

Answer 18

Gain before annual exempt amount

Question 19

CGT: Taxable gain = after…

Answer 19

Annual exempt amount deducted

Question 20

CGT: Disposal consideration: Usually

Answer 20

Usually: Proceeds received from asset

Question 21

CGT: Disposal consideration: Exception

Answer 21

Disposal not made at arms length

E.g. gift

Question 22

CGT: Disposal consideration: Not at arms length

Answer 22

Market rate

Question 23

Incidental costs of disposal examples

Answer 23

Auctioneers fees
Estate agent fees
Legal costs

Question 24

CGT: Allowable expenditure
(That may be deducted from net proceeds)

Answer 24

1. Acquisition cost of the asset
2. Expenditure on enhancing the value of the asset (capital expenditure)
   E.g. new extensions, architect’s fees
3. Incidental costs of acquisition
   E.g. legal fees, surveyors fees, stamp duty

Question 25

CGT: Acquisition cost: Usually

Answer 25

Purchase cost of asset

Question 26

CGT: Acquisition cost: Inherited

Answer 26

Probate value (Market value at death)

Question 27

CGT: Acquisition cost: Received gift

Answer 27

Market value at date of gift

Question 28

Chattel definition

Answer 28

Tangible moveable property E.g. picture, table

Question 29

The 2 types of chattels

Answer 29

1. Wasting chattels 2. Non-wasting chattels

Question 30

Wasting chattels: Expected life

Answer 30

Not exceeding 50y E.g. caravan, boat, animals, moveable plant and machinery claimable for CGT

Question 31

Wasting chattels: Tax treatment

Answer 31

Exempt from CGT

Question 32

Non-wasting chattels: Expected life

Answer 32

More than 50y E.g. antiques, jewellery, paintings

Question 33

Non-wasting chattels: Tax treatment: Gross proceeds less than or equal to 6k Cost less than or equal to 6k

Answer 33

Exempt

Question 34

Non-wasting chattels: Tax treatment: Gross proceeds more than 6k Cost more than 6k

Answer 34

Taxable as normal

Question 35

Non-wasting chattels: Tax treatment: Gross proceeds less than or equal to 6k Cost more than 6k

Answer 35

Marginal loss is restricted: Gross proceeds deemed to be 6k

Question 36

Non-wasting chattels: Tax treatment: Gross proceeds more than 6k Cost less than or equal to 6k

Answer 36

Marginal gain restricted to: Lower of: 1. Normal gain 2. 5/3 x (Gross proceeds - 6k)

Question 37

CGT (Non-wasting chattels): Gross proceeds

Answer 37

Sales proceeds Before deducting and incidental costs of disposal

Question 38

CGT (Non-wasting chattels): Cost

Answer 38

Original acquisition cost

Question 39

Sets of non-wasting chattels

Answer 39

Group of similar or complimentary items That are worth more together than separately E.g. pair of vases by the same ceramist

Question 40

Acquisition cost of one of a set of chattels And for disposal in parts of large assets broken up (e.g. part of price of land)

Answer 40

Cost x A/(A+B) A = Market value of part disposed of B = Market value of part retained

Question 41

Disposal of sets of chattels to the same or connected parties: Treatment

Answer 41

Disposals will be treated as one when applying The 6k rule The restriction for marginal gains (5/3 rule)

Question 42

Disposal of sets of chattels to the same or connected parties: Treatment: Disposals made in different tax years

Answer 42

Gain calculated on: Total figures Then apportioned to each disposal Based on sale proceeds