The Capital Gains Tax Chapter Flashcards Preview

Tax Compliance > The Capital Gains Tax Chapter > Flashcards

Flashcards in The Capital Gains Tax Chapter Deck (21):

Exempt Assets from chargeable Gains Tax

GT edged securities and qualifying corporate bonds
National savings certificates and premium bonds.
Assets held in New Individual Savings Accounts
Wasting chattels


Asset 1
Asset 2
Chargeable Gains
Annual Exempt AmountTaxable Gain.



Gross Proceeds!!!

Gross Proceeds
LessIncidental costs of disposal

Net disposal consideration
Less: Allowable expenditure
Cost of acquisition
Incidental costs of acquisition
Enhancement expenditure

Chargeable Gain/Loss


General Rule the disposal consideration is the proceeds received for the asset.

Exception use market value when-
The sale was not made at arms length eg a gift...

Deduct incidental costs of disposal. Examples include auctioneers fees estate agent fees and legal costs.


Allowable expenses!!!

Deduct the acquisition cost of the asset-
Purchase price of bought
Market value if gifted
Probate value if inherited

Enhancement expenditure- new extensions, architects fees.Incidental costs of acquisition eg legal fees, surveyors fees.


Part Disposals

Where only part of an asset is disposed of the acquisition cost
Cost *A/(A+B)
A-Market balue when disposed
B-Marker value of part retained



Beth makes the following gains and losses

Asset 1-Gain of 2000

Asset-Loss of 6500

Asset3-Gain of 12500

The Gains-2000+-6500+12500-8000


The brought forward

The capital loss brought forward.
Must be offset against first available future gains.
Must preserve the annual exemptions.The net gain is made equal to the annual exemption (11100).



Offset trading losses with the gains!!!
This is possible in the tax or the Prior!!!
To determine the trading loss which is allowed is
Loss remaining from the trading
The Gains.


Capital Gains Tax Payable For Individuals and Trustees

Rates of CGT for individuals
Basic Rate Bands-18
Excess of Basic Rate Bands-28


Rates if CGT for trustess

Rate of tax for trustess
In a bare trust the assets are treated as belonging to the beneficiary personally so any gain/loss on disposal is treated in the beneficiary as normal rather then the trustees.


Payments of CGT in instalments

CGT could be paid in instalments-if arising out of gift
-shares in a company-controlling holding
-share in unquoted company


CGT Instalments

Payable election 10 instalments annually
Interest normally chargeable on outstanding balance...


Husband and wife(civil partners) are taxable as separate individuals

Both entitled to separate annual exemption-naughty!!!


Transfers between married couples/civil partners

When assets are transferred between two spouses no gain or loss arises.
The transferor is deemed to dispose of the asset at its acquisition costs...
These rules only apply when the spousesliving together not seperated.


Connected Persons

Two people are connected if-
-relatives/relatives of spouses
-business partners and their spouses /


Chattels are tangible moveable property.

There are two types of chattel
-Wasting chattel
-Non-wasting chattels.


Wasting chattels

Not exceeding 50 years-exempt from CGT.


-Non-Wasting Chattels...

More than 50.years.
Antiques Jewelry Paintings
Special Rules...


Disposal of shares by an individ.

It is necessary to identify which shares have been sold.

Match shares disposed of against same class of shares acquired.

Same day

Within the following 30 days on FIFO basis.

S104 Pool-Shares bought before the disposal date...


Take the disposed shares

Then match to the shares by the number of shares them do the total costs of shares divide by total shares. Times this by the cost of shares&