CTA IND 55 - 66

Question 1

Loan stock will be a qualifying corporate bond (QCB) if it is:

Answer 1

1. Issued after March 1984
2. Expressed in sterling
3. Not convertible into any other currency

Question 2

What is a gilt?

Gilts and QCB’s are both…

Answer 2

Loan stock issued by government

exempt from CGT for individuals

Question 3

What happens when QCG received as part of a takeover?

Answer 3

Gain calculated in same way as if cash received.

Gain is frozen and it crystallises when QCB is sold

Question 4

EIS reinvestment relief is available when?

Answer 4

a taxpayer sells any asset and subscribes for qualifying shares

*must be UK resident

**must acquire shares 12 months before or three years after disposal of OG asset

Question 5

The amount deferred for EIS reinvestment relief is the lowest of:

Answer 5

1. the gain
2. the amount invested in EIS shares
3. a specified amount*

*so that AEA can be used

Question 6

What happens when you use EIS reinvestment relief?

Answer 6

The gain deffered is frozen, and crystallises at a chargeable event such as :

• sale of shares
  -no longer UK resident
• Shares not eligible

Question 7

When must a claim for EIS reinvestment relief be made by?

Answer 7

No later than 5 years from 31 january after the end of the tax year of the issue of the shares

Question 8

SEIS reinvestment relief is available when?

Answer 8

taxpayer sells asset and claims SEIS income tax relief in same tax year

Question 9

What does SEIS reinvestment relief mean?

Answer 9

1. Gain relieved is exempt from CGT
2. Gain relieved is 50% of ‘available SEIS expenditure’*

*Lowest of

1. gain
2. amount reinvested on which SEIS claimed (max 200,000)
3. amount specified

Question 10

What happens if SEIS shares are sold within 3 years?

Answer 10

Relieved gain becomes chargeable and is charged to tax in the tax year the shares were issued

Question 11

The amount of private residence relief for CGT is:

Answer 11

Gain x period of occupation / period of ownership

Question 12

Deemed occupation for PRR :

Answer 12

Last 9 months

Provided taxpayer lived in house point before and after:

1. Any period employed abroad
2. Up to 4 yrs when working away from home
3. Up to 3 yrs for any reason

*delayed occupation ie construction up to 24 months

Question 13

Lettings relief is residence let whilst part of property occupied as main residence.

Lettings relief is :

Answer 13

LOWEST OF :

1. gain attributable to letting
2. PRR
3. £40,000

Question 14

True or false: rent a room scheme restricts PRR

Answer 14

False

Question 15

Will PRR be apportioned if part of home used exclusively for business?

Answer 15

YES

Question 16

If an asset lost / destroyed and compensation is received, this is a disposal of that asset.

The date of disposal is…

The proceeds are…

Answer 16

1. date of receipt of compensation
2. compensation received + scrap value of asset (if any)

*if replacement asset bought within 12 months, gain can be rolled over

**cash retained is immediately chargeable

Question 17

If an asset becomes worthless, a negligible value claim can be made to crystallise the loss.

It can be claimed as a loss for either ….

Answer 17

that year

or

either of the two preceding tax years

Question 18

If the remittance basis is used, are you entitled to AEA?

Answer 18

No

*unless automatic remittance basis (income and gains under £2k)

Question 19

NRCG UK land disposals:

If residential property acquired before 6 April 2015 , the default method of calculation requires property to be valued at that date.

*non residential = 5 April 2019

Chargeable gain is..

Answer 19

Difference between sale proceeds and value at 5 April 2015 (2019 non residential)

*alternatively, an election for straight line apportionment can be made

Question 20

Straight line apportionment for residential property (non resident) is calculated by:

Answer 20

1. Normal gain calculation
2. Gain x time owned post april 2015 / total ownership (years)

Question 21

‘Qualifying individuals’ can ‘rebase’ their non-UK assets at 5 April 2017.

This means that…

Qualifying individuals are…

Answer 21

gains on foreign assets will be calculated using april 2017 value rather than original cost

those who became deemed domicile under 15/20 rule on 6 april 2017 and who paid remittance basis charge in any tax year

*rebasing is on an asset by asset basis

Question 22

A purchase of own shares will be treated as …. unless the conditions for …. are met

Answer 22

1. Income distribution
2. Capital treatment

Question 23

Purchase of own shares: Income distribution key concepts:

Answer 23

Treated as dividend income

Dividend = amount received on share buy back - original subscription price of the shares (nominal value)

*CGT on disposal. Sale proceeds are original subscription price

Question 24

Purchase of own shares: Capital distribution =

Answer 24

Disposal gives rise to capital gain at 10%,20% (may get BADR)

Question 25

The capital treatment only applies where:

Answer 25

1. Repurchase is by unquoted trading company which is not a 51% sub or group 2. wholly or mainly for benefit of trade 3. Shares are bought back from UK resident vendor who held shares for at least 5 years (or 3 if acquired on death) 4. Vendor reduces their interest in company by at least 25% 5. Vendor is not connected with company after buy back