CGT

Question 1

What disposal does the AA get set against if multiple in the same tax year?

Answer 1

• One with the highest charge e.g property

Question 2

Name 6 exempt assets for CGT

Answer 2

• Private Residence
• Private Motor Car
• Directly held Gilts
• Pension funds
• Woodlands
• NS Certs
• EIS
• Wasting Assets

Question 3

CGT losses - what is the process (3)

Answer 3

• Must be set against same year gains BEFORE annual allowance
• Can be carried forward indefinitely
• Have to be claimed within 4 years in from arising in tax year

Question 4

Explain Holdover relief (4)

Answer 4

• Applies to CLT for IHT
• No CGT payable on disposal
• Donee’s acquisition cost reduced by size of the gain
• Both donor and donee have to claim

Question 5

Explain Business Rollover relief (3)

Answer 5

• Available where business assets are sold and proceeds reinvested in other assets for the business
• Must be a trading business and assets used for trading
• New asset must be purchase 1Y before and up to 3Y after initial disposal
• Gain is ROLLED over - not lost

Question 6

EIS Reinvestment relief (3)

Answer 6

• CGT can be deferred if gain reinvested into EIS shares (1Y - 3Y rule applies)
• Gain only deferred until disposal

Question 7

Definition of a wasting asset for CGT (2)

Answer 7

• Tangible moveable property

- With an expected life of less than 50 years

Question 8

Chattell - definition and tax position (3)

Answer 8

• A piece of movable personal property
• Free from CGT if disposal proceeds less than £6k
• If less than £15k but more than £6k then the balance over £6k is multiplied by 5/3 to give chargeable gain

Question 9

Share Identification Rules (3)

Answer 9

• Same day acquisition
• Following 30 days
• Acquisitions in share pool - aggregate of remainder

Question 10

Part disposal formula

Answer 10

A
—— x Original Cost
A+B

A = Proceeds of part disposal
B = Market Value of part retained

Question 11

Qualifying criteria for investors relief

Answer 11

• Available for external investors
• 10% rate applies and the limit is £10m
• Shares must be newly issued
• And held for 3 continuous years before disposal

Question 12

Letting relief - what is it

Answer 12

• If all or part of the home has been left out, LR may be available instead of PPR, the max relief is the LOWER of:
• £40k
• The amount of PPR due
• The gain made on the let part of the property

Question 13

Principal Priv Residence Relief - (7)

Answer 13

• Up to 1 year between buying and moving in
• Any period before 01/04/1982
• Any period up to 3 years provided it was preceded by and followed by period of residence
• The last 18 months of ownership
• Up to 4 years in total if due to employment elsewhere in UK
• Any period whilst working abroad
• Any period living in job rented accommodation

Question 14

PP Residence Relief formula

Answer 14

Period of occupation
Total gain X ——————————-
Total period of ownership