Chargeable Gains

Question 1

list chargeable disposals

Answer 1

• sale or gift of whole or part of an asset
• exchange of an asset
• loss or destruction of asset
• receipts of a capital lump sum derived from an asset such as compensation received for damage to an asset or receipts for the surrender of an asset

Question 2

list exempt disposals

Answer 2

• disposals as the result of an individuals death
• gifts to charities
  however, these are exempt from TX-UK 24/35 so no gains will be available nor losses allowable

Question 3

list chargeable assets

Answer 3

all forms of capital assets e.g
- freehold land and buildings
- goodwill
- unquoted and quoted shares
- certain types of chattels

Question 4

list exempt assets

Answer 4

• motor vehicles
• main residence
• cash
• certain types of chattels
• investments held within ISA
• qualifying corporate bonds
• gilt edged securities
• NS&I certificates
• foreign currency for private use
• receivables and inventory
• prizes and betting winnings
• decorations for valour

Question 5

in which situation will MV be substituted for gross proceeds received

Answer 5

where the deal was a gift and where it was sold between connected parties

Question 6

types of expenditures that are allowable

Answer 6

• acquisition costs
• expenditure on enhancing value of asset
• expenditure incurred to establish, preserve or defend taxpayers title to the asset
• incidental costs arising on the acquisition of the asset

Question 7

annual exemption allowance amount

Answer 7

3000 deducted after current year capita; losses and deducted before capital losses from previous years are offset

Question 8

CGT rates

Answer 8

10% where it falls into basic rate band and 20% for any excess
residential CGT rates are 18% and 24%

Question 9

when should disposals be reported to HMRC

Answer 9

within 60 days along with a POA of relevant CGT liability

Question 10

payment of CGT due dates

Answer 10

31st Jan following the tax year (31st Jan 2026)
POA from UK residentials deducted final liability

Question 11

base cost of asset

Answer 11

deemed cost of acquisition

Question 12

part disposal formula

Answer 12

cost * value of the part disposed of / value of part disposed of + market value of the remainder

Question 13

define chattel

Answer 13

tangible movable property

Question 14

define wasting chattel

Answer 14

chattel with estimated life of less 50 years

Question 15

rules regarding the disposal of non-wasting chattel

Answer 15

asset bought and sold for less than 6000 = exempt
asset bought and sold for more than 6000 = normal CGT computation
asset bought or sold for 6000 or less = gain restricted to 5/3 (gain - 6000)
sold at loss = gross proceeds deemed at 6000

Question 16

formula non-chattel allowable cost

Answer 16

cost * remaining life / total life

Question 17

shares and securities exempt from tax

Answer 17

• listed government securities - gilts
• qualifying corporate bonds
• shares held in ISA

Question 18

identification rules for disposals by individuals - shares

Answer 18

when shares are disposed, they are matched against shares in the class in the following order:
- on the same day
- within following 30 days
- from the share pool

Question 19

define reorganisation in relation to shares

Answer 19

reorganisation involves the exchange of existing shares in a company for other shares of another class in the same company

Question 20

define takeover in relation to shares

Answer 20

takeover occurs when one company acquires the shares in another company either in exchange for shares, cash, or both

Question 21

cash proceeds - part disposal computation

Answer 21

cash received / cash received + MV of new shares * cost of original shares

Question 22

relief for non-business assets

Answer 22

private residence relief available on disposal of an individuals private residence
letting relief available on the disposal of private residence after letting

Question 23

relief for business assets

Answer 23

business asset disposal relief: available on the disposal of certain business assets
rollover relief: available on sale and reinvestment of business assets
gift holdover relief: available on gift of certain business assets
investors relief: available on disposal on certain shares

Question 24

PRR formula

Answer 24

gain * (periods of occupation / total period of ownership)
deduct the PRR from total gain on disposal

Question 25

periods of deemed occupation

Answer 25

- the last 9 months of ownership - up to 3 years of absence for any reason - any period spent living overseas due to employment - up to 4 years of absence as a result of working elsewhere in the UK

Question 26

how much letting relief is available

Answer 26

lower of: - 40,000 - amount of gain exempted from PRR - part of gain still attributable to the letting period

Question 27

BADR tax relief amount

Answer 27

first 1,000,000 taxed at 10% regardless of taxpayer income

Question 28

BADR claim date

Answer 28

within 12 months of Jan 1st following the tax year (Jan 1st 2027)

Question 29

conditions of IR

Answer 29

applies to unlisted ordinary shares of a trading company, subscribed for after 17th March 2016, which have been held for a minimum of 3 years from April 2016 by an individual not an employee of the company. IR limit of 10,000,000 at 10%.

Question 30

operation of rollover relief

Answer 30

gain arising on disposal of qualifying business asset is deducted from acquisition cost of replacement asset.

Question 31

rollover relief claim date

Answer 31

within 4 years of the laters options end of year: - disposal is made, or - replacement asset is acquired 5th april 2030

Question 32

qualifying business assets for ROR

Answer 32

both old and replacement must be qualifying business assets used in trade - goodwill - land and buildings - fixed plant and machinery

Question 33

claim date for GHR

Answer 33

by 5th April 2029

Question 34

calculation of indexation allowance

Answer 34

cost of asset * indexation factor

Question 35

matching identification rules for companies

Answer 35

- shares acquired same today - shares acquire nine days before - shares in share pool