CGT C&C wider reading Flashcards

Question

1) What's the CGT rate for Residential Properties? 2) What's the usual rate for jewellery?

Answer 1

1) 18/28% - AEA's are against the property first 2) 20% ## Footnote You would use your AEA against the property amout first to lower liabilities

Answer 2

1) Part compensation for damage to an asset to repair/restore assets to original state. 2) Where considerations received for small part disposal of land **and** does not exceed 20% of market value of the land **or** 20,000 3) Land sold and is recognisably separate from the rest of the land.

Answer 3

is it a chargeable person Is it a chargeable Occassion? Is it a chargeable Asset Is it a Chattel? Is it tangible? Is it moveable? Is it a machine/Plant? If a chattel, is it a wasting asset? If so, exempt ## Footnote Gains/loses arising on the disposal of chattels that are wasting assets are not normally liable to CGT

Answer 4

10 18 - basic rate band 20 - Standard higher rate 28 - higher rate (residential property)

Answer 5

Affects: Deadlines for declaring the disposal When tax owed is to be paid, the rate of tax charged AEA available, whether or not the gain is indeed chargeable (eg residency).

Answer 6

QCBs - chargeable to CT for companies and exempt for individuals.

Answer 7

Priority is: Chargeable to income tax? Chargable Person Chargeable Asset Chargeable Occassion

Answer 8

0) There is a disposal of an asset when there is a change in beneficial ownership (as opposed to the legal). 0.5) 'disposal' includes sale, exchange or gift OR PART DISPOSAL 1) Date of any contract, or 2) Conditions precedent in the contract are fulfilled. 3) Date the asset is transferred (unless specific rules apply). ## Footnote The date of disposal is important because it can determine the rate of tax charged, the availability and calculation of reliefs and whether or not the gain is chargeable. For CG purposes 'disposal' includes sale, exchange or gift. (s1 and s21 TCGA 1992, and CG12700+).

Answer 9

"Disposal where capital sums derived from assets" - Compensation - Insurance Claim

Answer 10

A "deemed disposal" claim is made without an actual disposal. The claim can be made to offset capital gains by recognising a loss on the asset. Example: Share value has plummeted to zero in a new business. You can't sell them so there is no "disposal" s24(2) TCGA92 ## Footnote There is no time limit for making a claim. A deemed disposal can be backdated in the claim made by up to 2 years from the beginning of the tax year in which the claim is made if

Answer 11

The sums that can be deducted in the CG computation are given in s38 TCGA 1992. They are * acquisition costs, including any incidental costs of acquisition * certain enhancement expenditure * incidental costs of disposal. Consider if falls under the exceptions under S39(1) and S39(2) provide: - Income tax priority test - Capital test ## Footnote TIP: for the income tax priority and capital test, imagine that the asset was in use as a fixed asset of a trade carried on by the owner and decide whether the expenditure would have been deducted in computing the income profits of the hypothetical trade. If it would have been deducted, it cannot be allowed in calculating a chargeable gain or allowable loss on a disposal of the asset.

Answer 12

section 39(1) provides any sum which: - has been - or could have been deducted in computing income or profits is not allowable as a deduction for Capital Gains Tax purposes. ## Footnote TIP: for the income tax priority and capital test, imagine that the asset was in use as a fixed asset of a trade carried on by the owner and decide whether the expenditure would have been deducted in computing the income profits of the hypothetical trade. If it would have been deducted, it cannot be allowed in calculating a chargeable gain or allowable loss on a disposal of the asset.

Answer 13

**NOT COMPLETE** There are four categories of incidental costs allowable under S38(2) TCGA1992. * Legal expenses * Surveyor's fees * Estate agent's charges are allowable as incidental costs.

Answer 14

If you dispose of an asset that you have owned continuously since 31 March 1982, your gain or loss will be calculated as if you had bought the asset on 31 March 1982 for its market value at that date. (s35(2) TCGA 1992). ## Footnote With effect from 6 April 2008 all assets held on 31 March 1982 will be rebased. This means that if you dispose of an asset that you have owned continuously since 31 March 1982, your gain or loss will be calculated as if you had bought the asset on 31 March 1982 for its market value at that date. (s35(2) TCGA 1992). Any March 1982 valuation takes account of all pre-March 1982 expenditure and costs, such as cost of acquisition and enhancement expenditure, so there is no further allowance for these. This means that if a March 1982 valuation is used in place of cost there will be no incidental costs of acquisition. That concludes this learning guide, we will now review the main points.

Answer 15

S39 gives the exceptions (tests) S38 gives the allowable deductions: 1) Acquisition 2) Enhancement 3) Incidental

Answer 16

It ensures only capital expenditure is deductible for capital gains tax purposes. eg. adding a gate is an enhancement (S38) and is capital. repairing the gate is not. Stops double-deduction of expenditure for ITSA and ensures only capital expenditure are deductible ## Footnote TIP: You have to imagine that the asset was in use as a fixed asset of a trade carried on by the owner and decide whether the expenditure would have been deducted in computing the income profits of the hypothetical trade. If it would have been deducted, it cannot be allowed in calculating a chargeable gain or allowable loss on a disposal of the asset.

Answer 17

From 6 April 2015, CGT was extended to non-UK resident individuals, trustees and certain companies who dispose of UK residential property. A difference is that they must make a return to HMRC of their gain within 30 days of completion of the disposal even if they have no tax to pay or have made a loss and in most cases CGT is due and payable at the same time. For UK property disposals by a UK resident that’s not their main home, for example buy-to-let properties or inherited property, made on or after the 6 April 2020, the customer has 30 days after the completion date to report and pay any Capital Gains Tax that may be due on the disposal. They will need to create a ‘Capital Gains Tax on UK Property Account’ before they can report and pay the tax using this service.

Answer 18

Non-resident persons who carry on a trade, profession or vocation in the UK through a branch or agency or, in the case of a company, through a permanent establishment, are chargeable to CGT, or in the case of companies to CT, on gains accruing on the disposal of assets situated in the UK if they are used or held * in or for the purposes of the trade at or before the time when the chargeable gain accrued * for the purposes of the branch or agency or permanent establishment at or before that time.

Answer 19

9.5 To use the remittance basis for your foreign income and foreign gains you must be UK resident and be either: not domiciled in the UK for years up to 2012 to 2013, not ordinarily resident in the UK — in this case: you can use the remittance basis for foreign income you cannot use it for foreign gains unless you’re also not domiciled in the UK You cannot use the remittance basis if you’re deemed domiciled under the changes brought in from 6 April 2017. From 2008/09 UK resident non-domiciled individuals are liable to CGT on gains accruing on disposals of assets situated anywhere in the world unless they successfully make a claim for the remittance basis to apply. How does the remittance basis work? 9.7 When you’re eligible and choose to use the remittance basis, you will be liable to UK tax on: all of your UK income and gains as they arise or accrue each year your foreign income and gains if and when you bring (remit) them to the UK, including any property which derives from those income and gains

Answer 20

A number of disposals are treated as if they give rise to neither a gain nor a loss to the transferor, even though they are chargeable occasions. Any consideration paid or received is ignored. These disposals include * transfers of assets between spouses and civil partners * transfers of assets between companies in the same group * gifts to charities.

Answer 21

* Companies can set losses from trading and UK property businesses against total profits chargeable to corporation tax, such as profits from all sources including chargeable gains. Section 37 and section 62 CTA 2010)

CGT C&C wider reading Flashcards

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