2a. Capital Gains Tax Relief

Question 1

What’s the order of reliefs to consider first
1. ROR/GR/IR
2. PRR/LR
3.EIS/ SEIS
4. BADR

Answer 1

2. PRR/LR
3. ROR/GR/IR
   4.BADR
4. EIS/SEIS

Question 2

Private Resident Relief

1. What type of relief : exempt/deferral/reduced rate
2. Overview of relief
   - if an individual sells what
   - all or part of the gain will be what from capital gains tax
3. Qualifying business assets
   - what type of building
   - grounds of up to how many hectare
4. Claim time period
   - if there’s a second property what must you do
   - within how many year of acquiring a second property
5. Computation
   Reduce / add PRR & letting relief agains what
6. Amount of relief
   If private resident owner occupied through the entire period of ownership = do what to the gain
   = will it be chargeable
   If private resident not owner occupied through the period of ownership
   - what happens to the PRR
   - what’s the calc : total gain x ( + / )

• If part of the property was let whilst owner occupied = what relief
• what’s the cal:
  Lower of :
  1.
  2. Maximum =
  3. Part of chargeable gain (after PRR) that relates to what

7. Deduct what first , PRR or LR agains what gain
8. Other rules
   deemed occupation : unconditional
   - last how many months of ownership
   Deemed occupation condition
   - employed abroad =
   - employed elsewhere in the uk = max how many years
   - self employed working abroad or in the UK - total max how many years
   - any reason = max how many years
   Conditions
   - property is what during that period
   - actual what at some time before and after some time of that period

Answer 2

1. Exempt relief
2. Overview of relief
   - if an individual sells their private residence
   - all or part of the gain will be exempt from CGT
3. Qualifying business assets
   - private residential building
   - grounds of up to half an heactare
   4.claim time period
   - if there’s a second property need to elect which property will be private residence
   - within 2 years of acquiring a second property
4. Computation
   - reduce PPR and letter relief against capital gains
5. Amount of relief
   If private resident owner occupied through the entire period of ownership = exempt all the gain
   = nothing chargeable now
   If private resident not owner occupied through the period of ownership
   - PRR = exempt the proportions
   - total gain x (actual occupied + deemed occupied/ total ownership )
   - if part of the property was let whilst
   Owner occupied = letting relief
   - lower of
6. PRR
7. Maximum of £40,000
8. Part of chargeable gain (after PRR) that related to letting
9. Deduct PRR then LR agains capital gain
10. Other rules
    Deemed occupation: unconditional
    - last 9 months of ownership
    Deemed occupation condition
    - employed abroad = unlimited
    - employed elsewhere in the UK = max 4 years
    - self employed working abroad or in the uk = total maximum of 4 years
    Conditions
    - property is private resident during that period
    - actual owner occupation at some time before and after of that period

Question 3

Rollover relief
1. What type of relief = Exempt / deferred / reduced rate
2. Replacement of what relief
3 Overview of relief
- If a individual / company sells a what and replaces it with what
- within a what
- and makes what
- can what the gain arising on the disposal

4. qualifying assets
   -What used in what
   -Fixed what and what
   -What type of intangible asset for -individual/company?
5. Qualifying time period
   - must reinvest within how many years:
   - how many months before and
   - how many months after
   The date of what
6. Claim time period
   For individuals (companies):
   - within how many months of the later of the end of the tax year in which the
   - what is made and
   - what assets acquired
7. Amount of relief
   - what happens when you reinvest all sale proceeds
   what happens when the sale proceeds not all reinvested:
   Chargeable now = lower of
   - what gain or
   - sale proceed not what
   Rest of gain = what
8. Method of obtaining relief
   Reinvesting in Non depreciating asset
   - deduct ROR from what cost of replacement asset
   - gain deferred until when
   Reinvestment in depreciating asset
   Freeze deferred gain until the earliest of
   - £
   - x
   - how many years from purchasing the depreciating asset
   = max deferral how many years
9. Other rules
   For individuals
   If a chargeable gain remains after ROR
   - is BADR available on remain gain
   ( relive on individual assets?)

For companies
ROR =

Answer 3

1. Deferred relief
2. Replacement of business asset relief
3. Overview of relief
   If an individual / company sells a qualifying business asset and replaces it with a qualifying business asset
   -within a qualifying time period, and
   - makes a claim
   - can defer the gain arising on the disposal
4. Qualifying assets
   - land and buildings used in trade
   - fixed plant and machinery
   - goodwill for individuals only

5.qualifying time period
- must reinvest working 4 years:
- 12 months before and
-36 months after
The date of disposal

6. Claim time period
   For individuals (companies)
   - within 4 years of the paste of the end of the tax year in which the
   - disposal is made
   - and replacement assets acquired
7. Amount of relief
   when you reinvest all sale proceeds
   - all gains deferred
   - no chargeable gains now
   Not all sale proceeds reinvested:
   - chargeable now = Lower of:
   - all gain
   - sale proceed not reinvested
   Rest of gain = deferred
8. Method of obtaining relief
   Reinvesting non depreciating asset
   - deduct ROR from base cost of replacement asset
   - gain deffered until disposal
   Reinvest in depreciating asset
   Freeze deferred gain until the earlier of
   - sales
   - stop using it in trade
   - 10 years from purchasing the depreciating asset
   = max deferral 10 years
9. Other rules
   For individuals
   If a chargeable gain remains after ROR
   - No BADR is available on remaining gain
   (No relief on individual assets)

For companies
ROR = only relief available

Question 4

Gift holdover relief
1. Overview of relief
-If an individual gifts a what asset
A to another individual, trust or company
And
- receive r is resident in where and
Makes a claim
- can do what to a gain until the donee disposes the asset

2. Qualifying business asset
   - assets used in what type of trade
   - or in doners what type of trading company
   - at least how many %
   - shares in a unquoted trading company (does number of shares matter)
   Agricultural property
   - any what put into a what
3. Amount of relief
   Outright gift
   - defer what gain
   - anything chargeable now?
   - unless asset = shares and hold more than % interest
   = restrict gift relief by rest of gain
   = chargeable at time of gift
   If sale for less than MV
   - chargeable when
   Amount chargeable=actual proceeds less what
   - rest of the gain = what happens to that = what relief
4. Method of obtains relief
   - deducting GR from what and when
5. Other rules
   Emigration of donee
   Within how many years is GR chargeable on the disposal

Answer 4

1. Qualifying business asset
   - UK
   - defer
2. Qualifying business asset
   - assets used in unincorporated trade
   - or in doners private trading company
   - at least 5% interest
   - shares in an unquoted trading company (regardless number of shares)
   - agricultural property
   - any assets put in a trust
3. Amount of relief
   Outright gift
   - defer full gain
   - nothing chargeable now
   - unless asset = shares and holds more than 5% interest
   =restrict gift relief by rest of gain
   = chargeable at time of gift
   If sale for less than MV
   - chargeable when
   Amount chargeable = actual proceeds less cost
   - rest of gain = deferred = gift rollover

4.method of obtaining relief
- deducting GR from base cost on disposal of the asset

5. Other rules
   Emigration if donee within 6 years is GR chargeable on the disposal

Question 5

Incorporation relief

1. Overview of relief
   - all assets except what asset
   - of what type of business
   Transferred to a company
   - in return for what
   Gains deferred until when
2. Conditions
   - what must you transfer
   As a what
3. Can you disapply
4. What if you receive cash

Answer 5

• all assets except cash
• of an individuals sole trader business or partnership
  Transferred to a co.
• in return for mainly shares
  Gains deferred until individual disposes shares

2. Conditions
   Must transfer all of the assets in the business except cash
   As a going concern
3. Relief is automatic but can dissolute
4. Cash is chargeable now

Question 6

BADR
1. What type of relief

2. Qualifying assets
   - what part of an unincorporated business
   - at least how many % in shares Ina personal trading company AND has to be what
3. What’s the time period owning the business or shares to qualify
4. Whats investors relief

Answer 6

1. Changes tax rate at10%
2. Qualifying business assets
   - Whole or substantial part of unincorporated business
   - Shares in a personal trading company at lease 5% AND has to be an employee
3. Time period
   Must have owned business / shares for 2 years
4. Whats investors relied
   - shares subscribe
   - unquoted co
   - held more than 3 years
   - not an employee

Question 7

EIS relief

1. Overview of relief
   If an individual
   - invests in what shares
   Can defer the gain on any asset
2. Qualifying time period
3. Amount of relief
4. When can the gain be exempt rather than deferred

Answer 7

1. An individual invests in EIS shares but can defer the gain on any asset
2. 4 years
3. Any amount upto max:
   Lower of gains and amount invested in EIS shares
4. When EIS share held for at least 3 years

Question 8

SEIS relief
1. Overview of relief
- invests in what shares
- can exempt some of the gain on what

2. Time period
3. Amount of relief
4. Method of obtaining relief
5. Other rules
   Withdrawal of SEIS relief if the disposal within 3 years
   Not at arms length = chargeable / not chargeable previous exempt gains
   At arms length = proportion of the gain previously exempted = chargeable/ not charge

Answer 8

1. Qualifying shares
   - invests in SEIS shares
   - can exempt some of the gain on any asset
2. Time period
   - same year
3. Amount of relief
   Max exemption = 50% of the lower of :
   Gain and amount invested (max 100k)
4. Deduct from gain = exempt
5. Not arms length = chargeable
   At arms length = portion not chargeable