CGT Flashcards
(22 cards)
Exempt assets under CGT?
- Cash
- Wasting chattels (life < 50 years) - except business machinery
- Non-wasting chattels bought and sold for <£6,000
- National Savings Certificates and Bonds
- Cars
How are current year losses used (annual exemption in mind)?
How are b/fwd losses used?
How are excess losses used?
Used against current year losses, even if AE is wasted.
Used against gains AFTER annual exemption (£3,000).
C/fwd to use against future gains.
Treatment of disposal of assets between married couple?
What is the value of the transfer?
NG/NL
Acquisition cost is equal to deemed proceeds
Value of disposals to connect persons?
Treatment of losses?
Who also can be a connected persons?
ALWAYS at market value.
Ring fenced to futures gains from same person.
Relatives, business partners and their spouses. Also controlled companies.
How are gains on disposals from the gift of land or shares (in controlled company) paid?
10 equal instalments from 31 Jan
Order of valuing cost of pool of shares?
1) Shares purchased on same day
2) Any purchases in previous 30 days
3) Average price of pool of shares
How is the value of gifted quoted shares calculated?
Average of highest and lowest marked price
Who gets rollover relief?
Ltd companies ONLY
When does Private Residence Relief apply?
How is it calculated?
When disposing of main residence that has been lived in (one residence at any one time).
Period of actual/deemed residence / Total period owned
Rules for deemed occupation of a residence?
- Last 9 months of ownership (remember!)
- Up to 3 years for any reason (remember!)
- Up to 4 years whilst working in UK
- ANY PERIOD when working overseas
- Up to 2 years when prevented from living there
When does Letting Relief apply?
How is it calculated?
Can it be used in addition to PRR?
When disposing property that has been PARTLY let out (not let out the entire property the entire time).
Lower of:
- Gain x letting period %
- £40,000
- PRR relief
Yes, it can be used as well as PRR
When does Gift Relief apply?
(What if it’s a quoted company?)
How is it applied?
Gift/sale of shares or business assets undervalue in a trading business (not investment company).
If it is a QUOTED company, need 5%+ holding.
Chargeable gain is the proceeds less the cost.
The GIFT RELIEF is the difference between the MV and chargeable gain.
The base cost of the asset received is MV - gain that would have occurred.
(Basically transferring the gain on to the next person).
When does Business Asset Disposal Relief apply?
How is it applied?
Ownership of more than 2 years in:
- Controlling share in un-incorporated business
- 5%+ in quoted company AND an employee
Chargeable gain is taxed at 10%
Lifetime limits apply (in Hardman’s)
How is residence worked out? What tests are required?
1) Automatic overseas test - if passed not UK resident
2) Automatic UK test - if passed, UK resident. If not, sufficient ties test.
3) Sufficient ties test - if passed, UK resident
When does Investor’s Relief apply?
How is it applied?
Ownership of more than 3 years in:
- Shares in UNQUOTED trading company
Chargeable gain is taxed at 10%
Lifetime limits apply (in Hardman’s)
How is a part disposal calculated?
If gift, what value is proceeds?
Original cost x
Proceeds of part sold / (Proceeds of part sold + value of amount left)
If gift, proceeds = MV
If individual is on remittance basis, what are overseas gains calculated as?
Lower of:
- Proceeds remitted to UK
- Original gain
Shares in what types of companies don’t get gift relief?
Investment companies
Quoted company if less than 5% holding.
Non-trading companies
What tax is Business Asset Disposal Relief, Investor’s Relief and Business Property Relief used in?
BADR - CGT
Investors Relief - CGT
BPR - IHT
Which out of IHT and CGT do you work out the value of quoted shares using ONLY the average method?
CGT
(Average of low and high marked prices)
Restriction on gift relief used?
Relief = Gain x (Assets chargeable for CGT that are business related / Total assets chargeable for CGT)
Taxation for non-domiciled but UK residents (for UK and overseas income)
UK - taxable
Overseas - taxable (possible remittance basis)
