Capital gains taxation

Question 1

What is the primary Capital Tax Legislation

Answer 1

Taxation of Chargeable Gains 1992

Question 2

Where is the definition of market value contained for capital tax

Answer 2

Section 272 of the TCG 1992

Question 3

What is Capital Gains Tax

Answer 3

Tax on the gain made from the disposal of an asset

Question 4

What are the tax rates for capital gains tax

Answer 4

18-28% for residential property

10-20% for non-residential property

Question 5

What is the taxable threshold for capital gains

Answer 5

Gains of over £12,300

Question 6

How is capital tax calculated

Answer 6

Gain made on an asset which has been adjusted for indexation

Question 7

What is rebasing

Answer 7

In capital taxation it is assumed any asset held at 31 March 1982 has been sold and immediately reacquired at its market value on that date. The effect is that any gain are attributed to that period since then

Question 8

What is a permitted area

Answer 8

An area falling under private residence relief for capital gains tax purposes. This area is under 0.5 hectares with anything over having to be of appurtenance to the reasonable enjoyment of the property and within the same curtilage.

Question 9

What type of land does permitted area apply to

Answer 9

Applies to garden and grounds

Question 10

What is hope value?

Answer 10

The potential value which could be achieved in the future. For example the impact that planning permission can have if granted for a site

Question 11

What is the deemed acquisition date for CGT?

Answer 11

31st March 1982, which is the rebasing date

Question 12

What is the difference between MV for red book valuations and MV for CGT & IHT

Answer 12

Capital tax MV does not account for the flooding of the market and also accounts for special purchasers

Question 13

Are expenses and finance on expenses deducted from CGT?

Answer 13

Yes

Question 14

What is fall in value relief?

Answer 14

Value of gifted property has fallen in value since the date of transfer. The amount the asset has fallen will be added onto your capital gain allowance

Question 15

What are some reliefs companies can receive for CGT

Answer 15

Entrepreneurs’ Relief (sole traders or business partners)

Rollover Relief (buy a new asset 3 years after disposal of old)

Hold-Over Relief (you used the business asset for trading as a sole trader)

Incorporation Relief (transfer all your business assets in exchange for shares in a company)

Question 16

What is private residence relief

Answer 16

Relief given for the disposal of a residential estate used as the sole residence of owners. The permitted area is exempt from CGT and encocmpasses 0.5 hectares of land and anything else deemed of appurtenance

Question 17

What happens if a loss is made on the disposal of an asset?

Answer 17

This loss would be deducted from the tax gain from that year or added onto your tax free allowance if no gain has been made