Capital Gains Tax

Question 1

What are the 2 exempt chargeable transfers?

Answer 1

Gift to charity

Transfer of assets on death (IHT!)

Question 2

What are the 9 exempt assets from capital gains tax?

Answer 2

Cars
UK government gilts
Winnings
NSC
NISAs
Wasting chattels
Current assets
Currency
Awarded medals

Question 3

What is the AEA?

Answer 3

£11,000

Question 4

Basic rate of CGT?

Answer 4

18%

Question 5

Higher rate of CGT?

Answer 5

28%

Question 6

When is payment of CGT due?

Answer 6

Following January 31st

Question 7

Proforma to calculate capital gain/loss?

Answer 7

Proceeds X
- Costs to sell (X)

= net proceeds

• cost (X)
• enhancements (X)

= capital gain (X) or loss (X)

Question 8

How are capital losses offset?

Answer 8

1) against current year gains (all)

2) against future losses (down to AEA level to use that in its entirety!)

Question 9

Proforma for CGT of part-disposals/damaged assets?

Answer 9

Proceeds (X)
- costs to sell (X)
- ‘part’ value (X)
= capital gain X or loss (X)

‘part’ value = A / (A+B)
[A ~ proceeds of sale
B ~ m.v. of remaining part]

Question 10

How is a destroyed asset treated for CGT?

Answer 10

As if a normal, full disposal

(If replaced

Question 11

What is the difference in meaning of chargeable gain and taxable gain?

Answer 11

Chargeable = X

Taxable = X - AEA

Question 12

What is a chattel?

Answer 12

Tangible, moveable property

Question 13

What is a wasting chattel?

Question 14

What is a non-wasting chattel?

Answer 14

> 50 years expected life

Question 15

Cost

Answer 15

Exempt!

Question 16

Cost > 6000

Proceeds > 6000

Answer 16

Normal

Question 17

Cost > 6000

Proceeds

Answer 17

Proceeds deemed 6000

Question 18

Cost 6000

Answer 18

LOWER OF

Proceeds - cost
or
5/3 x (proceeds - 6000)

Question 19

Calculation for PPR relief?

Answer 19

Gain x (occupation/ownership)

i.e. only gains during unoccupied chargeable

Question 20

What are the 4 deemed occupation criteria for PPR relief?

Answer 20

1) last 18 months
2) up to 3 years any reason
3) up to 4 years work UK
4) any time work abroad

(must return afterwards at some point!)

Question 21

How are residential lets calculated?

Answer 21

LOWER OF

£40,000
PPR already given
gain arising not covered by PPR

Question 22

What are the 3 categories of chargeable gains?

Answer 22

Sale of asset
Gift of asset
Loss/destruction of asset

Question 23

How is the value of quoted shares/securities calculated?

Answer 23

LOWER OF

• 1/4 up method (of bids)
or
• average of lowest~highest marked bargains

Question 24

Matching rules for individuals?

Answer 24

1) same day acquisitions
2) next 30 days acquisitions (FIFO)
3) share pool (w.av.)

Question 25

How are paper/cash takeovers valued for CGT?

Answer 25

A - (A/[A+B] x cost of shares) = CGT ``` A = cash element of takeover B = share value element of takeover ``` (^ fraction = p.v. of share element)

Question 26

Which part of a paper/cash takeover is chargeable?

Answer 26

Cash part NOT the paper/share part