Week 7 - Capital Gains Tax Relief Flashcards
(15 cards)
What is Capital Gains Tax Reliefs?
A disposal of a business or its assets
How do you calculate PPR (Principle Private Residence) exemption?
((Selling price) - (amount brought for)) x period of occupation/total period of ownership
When is PPR (Period Private Residence) exempt?
If the property has been lived in for the whole period of ownership
With PPR (Principal Private Residence), what number of years can a period not exceed for it to qualify for PPR?
3 years
If a person was required to work elsewhere because of employer, does their PPR qualify?
Yes, it qualifies as absence
In terms of PPR, the final 9 months are deemed as lived in. True or False?
True
What is letting relief?
When a person lets out part of their PPR as accommodation
What is Rollover relief?
It allows gains arising on qualifying business assets to be deferred if the sale proceeds are reinvested in another asset
How is Letting Relief calculated?
The lowest of:
1. The gain which arises by reason of the letting
2. The gain which is exempt because of the PPR exemption
3. £40,000
What is Business Assets Disposal Relief?
It allows the first £1m of gains relating to a business/investment in a business to be taxed at 10% regardless of taxable income
How does an asset qualify for a Business Assets Disposal Relief?
- If a business is unincorporated
- Assets of a business being ceased in the last 3 years
- Assets must have been owned for at least 2 years before the date of disposal
What is the CGT annual exemption amount?
£3000
Would shares qualify for BADR?
- If you’re an employee of the company
- If it is a trading company
- You must hold 5% of both the ordinary share capital and voting rights
What are qualifying assets for rollover relief?
Goodwill, land and buildings, plant and machinery
How can rollover relief be claimed?
A claim must be made within 4 years in which old asset is sold/new asset brought
