2d. Capital Tax - IHT VS Capital Gains Tax

Question 1

Cash

IHT VS CGT

Answer 1

IHT : PET / CLT - NO BADR
CGT: EXEMPT

Question 2

Car

IHT VS CGT

Answer 2

IHT
- PER or CLT
- NO BPR

CGT
- exempt asset

Question 3

Chattels e.g antiques

IHT VS CGT

Answer 3

IHT
- pet or CLT
- no BPR
- valuation rules = diminution in value / related property rules

CGT
- chargeable disposal
- special chattel rules
- no gift holdover relief (unless put into a trust)
- NO BADR
- EIS / SEIS investment relief available

Question 4

Home

IHT VS CGT

Answer 4

IHT
PER or CLT
- gift with reservation
- no BPR

CGT
- Chargeable disposal
- private resident relief 175k available
- letting relief available
- no gift hold over relief - unless put into a trust
- no BADR
- EIS / SEIS reinvestment relief available

Question 5

Unincorporated business

IHT VS CGT

Answer 5

IHT
Treat as a gift if one asset = business
PET or CLT
Values at MV of net asset of business
BPR= 100%
- if a trading business
- min. Period of 2 years ownership

CGT
- treated as disposal of several assets
- calculate gain on every single chargeable asset in the business - use MV of asset at date if gift
- Gift holdover relief available : no min period of ownership
- BADR available : only held for Atleast 2 years
- EIS/ SEIS reinvestment relief available

Question 6

Quoted shares

IHT VS CGT

Answer 6

IHT
- PER / CLT
- valuation rules lower of quarter up or avg marked bargain
- excludes AIM shares

• BPR available = 50% - only if trading co. & donor has controlling interest before gift (v. Unlikely)
• min period of 2 years ownership
• restrict if co. Has excepted assets:
  BPR= value of shares x (MV of business assets / MV of total assets )

CGT
- chargeable disposal
- valuation rule = (H + L) /2
- includes AIM shares
- gift holdover relief:
If trading co & Atleast 5% interest (unlikely) , don’t have to own co., no min period of ownership
- BADR available:
5% & work for co & held shares for 2 years
- EIS / SEIS reinvestment relief available

Question 7

Unquoted shares

IHT VS CGT

Answer 7

IHT
PET o CLT
Valuation rules = diminution in value
Related property rules apply?
Includes AIM shares
BPR available= 100%
Only if trading company
Regardless of number of shares held
Min. period of ownership = 2 yearsRestrict if company has excepted assets:
BPR = Value of shares x (MV of business assets / MV of total assets

CGT

Chargeable disposal
Valuation rules = MV of shares gifted
Excludes AIM shares
Gift holdover relief available
- Only if a trading company
Regardless of number of shares held
Do not have to work for the company
No min. period of ownership
If hold less than 5% interest: no restriction of relief
If hold 5% or more interest, and the company has investments:
relief is restricted by (BA / CA) (unless put into a trust)

• BADR available
  Only if a trading company, AND
  Must hold at least 5% interest, AND
  Must work for the company, AND
  Must have held shares for at least 2 years
  EIS/SEIS reinvestment relief available