RO3 LO2

Question 1

Where an asset is sold, the date of the disposal for
CGT is the date

Answer 1

contract becomes binding

Question 2

Where there is an unascertainable value, i.e. part
of the sale price is not known at the sale date, the

Answer 2

market value is used to establish the CGT due
with a further calculation made when the final
payment takes place

Question 3

disposal proceeds between connected persons

Answer 3

will be the market value not the actual proceeds

Question 4

The main exemptions to CGT

Answer 4

► Private motor vehicles
► NS&I products
► Government bonds (gilts) and qualifying
corporate bonds
► Foreign currency for personal use outside UK

Question 5

What are Chattels

Answer 5

tangible, moveable property

Question 6

non-wasting chattel where the value (not the gain) exceeds £6,000, tax may be due, restricted to the lower of:

Answer 6

► The actual gain
► 5/3 of the excess over £6,000

Question 7

Wasting assets (Chattels)

Answer 7

(tangible movable property with an
expected life of less than 50 years) are exempt from
CGT unless they are plant and machinery

Question 8

Private residence relief

Answer 8

Total gain x (period of main residence/total period
of ownership)

Question 9

Exempt periods when calculating period of occupation

Answer 9

► Up to one year between purchase and moving in
► The last nine months of ownership
► Any period of living in job related accommodation

Question 10

letting relief

Answer 10

can be claimed for period where the owner was not only resident in the property, but was also letting part of the property out.
relief will only apply if the owner was living in the property whilst it was being let out.

Question 11

Letting Relief given will be the lower of

Answer 11

► £40,000
► The amount of PPRR you are eligible for
► The chargeable gain from the let part of the
property

Question 12

Calculating the amount to be taxed if the asset is chargeable

Answer 12

► Determine the disposal proceeds
► Deduct the acquisition cost
► Deduct any costs in arranging for the purchase or
the sale and any costs of enhancements
► Offset any capital losses
► Deduct the annual exemption
► Apply the right tax rate(s)

Question 13

Business Asset Disposal Relief

Answer 13

individual sells or disposes of all or part of a
qualifying business asset they have owned for at least two years
reduces the tax charge from 24% to 14% on lifetime gains of up to £1,000,000.

Question 14

Holdover relief

Answer 14

Both the donor and the donee must claim it
together. The CGT is not avoided, it merely transfers to the
donee and could become chargeable when/if they
then dispose of the asset.

Question 15

Holdover relief is only available

Answer 15

for relevant business assets to persons resident in the UK. If the donee
ceases to be UK resident within six years, the gain
becomes assessable on the donee. If the donee fails to pay, the donor becomes liable.

Question 16

EIS shares

Answer 16

entire gain can be deferred for CGT purposes until the EIS
shares themselves have been disposed of

Question 17

SEIS shares

Answer 17

50% of the gain is immediately exempt from CGT,
with the remaining 50% being immediately assessable
for CGT

Question 18

Investor Relief

Answer 18

provides a relief from CGT for investors in unlisted trading companies.
Assuming the shares were newly issued, and held for
at least three continuous years prior to disposal, the
investor will be entitled to a lifetime limit of £1 million
for such gains, taxed at a lower CGT rate of 14%.

Question 19

Where due, CGT is payable by

Answer 19

31st January following the end of the tax year in question

Question 20

Where IHT is due there are currently 4 rates:

Answer 20

► 0% on estates up to the available nil rate band (NRB)
► 40% on estates above the available NRB
► 36% on estates above the available NRB
where at least 10% of the net estate is donated to charity
► 20% on chargeable lifetime gifts over the NRB in
the year the gift is made.

Question 21

Liability to IHT for anyone who is long-term resident (LTR)

Answer 21

will be due on worldwide assets

Question 22

The RNRB that can be claimed by an estate will be
reduced

Answer 22

by £1 for every £2 of excess estate over £2m

Question 23

Gifts in consideration of marriage/civil partnership

Answer 23

£5,000 from parents.
£2,500 from grandparents/great grandparents etc.
£1,000 from anyone else

Question 24

exempt gifts

Answer 24

► Gifts for the national benefit
► Gifts to registered charities, and
► Gifts to qualifying political parties
► Education & maintenance

Question 25

Gifts to a non-LTR spouse/civil partner

Answer 25

non-LTR spouse/civil partner makes a gift to a LTR spouse , that gift will also be fully exempt from IHT. from a LTR spouse to a non-UK LTR individual the gift is not fully exempt

Question 26

Chargeable lifetime transfers (CLTs)

Answer 26

gift where one individual’s estate goes down in value but no-one else’s estate rises in value and can result in an immediate lifetime inheritance tax charge

Question 27

Potentially exempt transfers (PETs)

Answer 27

neither chargeable, nor exempt, this is a gift where one individual’s estate falls in value and another’s goes up in value

Question 28

Taper relief serves to reduce only

Answer 28

tax on the gift, not the value of the gift itself

Question 29

Quick Succession Relief (QSR) Calculation

Answer 29

(Net Gift Received/Gross Gift Received) x IHT paid x QSR %

Question 30

Where a business qualifies for business relief, there are two rates:

Answer 30

► 100% for interests in unincorporated businesses or for any shareholding in Alternative Investment Market companies (AIM), EIS and SEIS ► 50% for controlling interests in fully listed companies or land, buildings, plant, or machinery used in connection with a business.

Question 31

Agricultural Property Relief

Answer 31

applies to agricultural property situated in the EEA and applies to land, buildings, and growing crops relief is 100% for owner occupied farms and farm tenancies, and 50% for interests in let farms

Question 32

A gift with reservation (GWR) arises when

Answer 32

someone gifts an asset, hoping to reduce an IHT liability, but continues to enjoy a benefit from that asset throughout their life.

Question 33

Residence is

Answer 33

status in a given tax year , and therefore is determined separately for each tax year, from 6th April in one year to 5th April

Question 34

Automatic Non-UK resident test

Answer 34

Have you been present in the UK for less than 16 days in the current tax year? Have you been present in the UK for less than 46 days in the current tax year Have you worked full-time overseas and been present in the UK for less than 91 day in the current tax year?

Question 35

Automatic UK resident test

Answer 35

Have you been present in the UK for more than 183 days in the current tax year? Have you had a home in the UK for more than 91 consecutive days in the current tax year? Have you worked full-time in the UK in the current tax year?

Question 36

For tax purposes, an individual would continue to be treated as UK domiciled for

Answer 36

three years after acquiring a domicile of choice

Question 37

An individual will be deemed long-term resident (LTR) in the UK once they have been UK resident for

Answer 37

10 out of the last 20 tax years