CGT Reliefs Flashcards
(10 cards)
Rollover Relief (ROR)
-Tax deferral
-Disposal of trading asset and replacement with new trading asset
-L&B and P&M used in unincorp trading business
-Goodwill
-Replacement trading asset can be purchased 1yr before disposal or 3yrs after
-Any proceeds not reinvested are taxable now
-Gain on old asset reduces base cost of new asset
-When new asset is sold, gain will be higher as base cost is lower
-HOR if new asset has <60yrs, gain held over for max of 10 years
Gift Relief for Business Assets
-Tax deferral
-Gift of business assets or shares
-APPLIES TO
1.Trading assets used in unincorp trading business
2.Shares in donor’s trading company
3.Unquo shares in trading company
-Gift amount reduces gain chargeable now and base cost of the asset/shares
-No gain arises for the donor on disposal of the asset. No CGT payable
-Donee’s deemed cost of acq is reduced by amount which would have been chargeable without GR
-GR= CTA/TCA
Gift Relief when IHT due
-Tax deferral
-Special type of GR when there is a lifetime IHT charge on asset (CLT)
-Applies to disposal of ALL ASSETS when there is a CLT charge
-Gift amount reduces the gain chargeable now and the base cost of the assets/shares
-Still applies when IHT payable is nil due to AE. NRB or BPR
Incorporation Relief (IR)
-Tax deferral
-Unincorporated business transferring assets to company
-APPLIES TO
-Sole traders/Partners transferring assets to company in exchange for shares. Has to be going concern and all assets transferred (not cash)
-Gains on old assets reduce base cost of the shares
-When shares are sold, gain will be higher as the base cost is lower
EIS Reinvestment Relief
-Tax Deferral
-Disposal of asset and replacement with EIS shares
-Applies to disposal of -ANY ASSET
-Replacement EIS shares can be purchased 1yr before disposal/3 yrs after
-Gain deferred is restricted to cost of new shares
-Gain held over until shares sold or indiv becomes Non-Res
-If BADR applies to orig disposal, then still applies when gain becomes chargeable
Takeovers and Reconstructions (Share for Share)
-Tax Deferral
-Disposal of shares in exchange for new shares/bonds in another company
-Applies to disposal of
-SHARES
-new shares issued in exchange for old shares
-acquiring company owns >25% of shares/50% of voting rights
Consideration
-Shares- new shares have base cost of old shares (gain deferred until shares sold)
-Bond (QCB)- gain on old shares held over until bond sold
-Cash-taxable now (but if <5% of consideration/£3k deduct from base cost of shares)
-If consideration is mixed then apportion gain between each type of consideration before applying above treatment
Business Asset Disposal Relief (BADR)
-Tax Rate Reduction Relief
-10% tax rate
-Disposal of business assets or shares
-APPLIES TO
-Trading assets used in unincorp trading business (L&B, P&M, GW)– 24m ownership, disposal of part/all of business or business ceasing
-Shares in trading company or group– 5% of shares, voting rights and profits, 24m ownership and if indiv is employee
-Assets held personally by indiv but used by p’ship/company–disposing of 5% of p’ship business/shares, p’ship/company did not pay MV rent to use asset, 36m ownership, 24m use by p’ship/company
-Treat company as trading if non-trading income and assets <20%
-Cannot claim on GW disposed to a close company
-£1m lifetime limit
-If shareholding drops below <5% then can elect for notional disposal so gain is taxed now at 10% OR elect to tax to be paid when shares are sold in future
-Shares acquired via EMI share option– No 5% of shares, voting rights and profit condition. 24m ownership from date of grant, not exercise
Investors’ Relief (IVR)
-Tax Rate Reduction Relief
-Disposal of Shares
-APPLIES TO
-Shares in trading company—-
36m ownership
Not an employee
Subscribed to shares when new
Shares issued after 17 March 2016
Unquoted company
CGT @10%
£10m lifetime limit
SEIS Reinvestment Relief
-Tax Exemption Relief
-Disposal of asset and replacement with SEIS shares
-APPLIES TO
-Disposal of any asset
-Replacement SEIS shares must be purchased in same year as disposal
-Gain exempt (lower of gain/IT relief)
Private Residence Relief
-Tax Exemption Relief
-Disposal of residential property
-Has to be occupied by indiv
-Disposal exempt if occupied as indiv’s main residence
-Partial PRR when property occupied for part of ownership
-Periods of absence treated as occupation
-3 yr absence
-4 yr absence due to UK work
-Any absence due to OS work
-Last 9m of ownership
-Spouses may only have one PRR between them
-PRR only applies to non-business element of gain
-Letting relief is the lower of
£40k, Gain in relation to period when property was let out and PRR
