3 - Capital Gains Tax (Self-Test Questions) Flashcards
What is the base date for CGT?
31 March 1982
What is the broad definition of ‘disposal’?
Any transfer of ownership or derivation of a capital sum from an asset
Can capital gains tax (CGT) on a sale of a business be paid in installments if part of the consideration is payable three years after the sale and the amount depends on the business’s profits?
No. Only part of the consideration is contingent and so, an estimate of this must be included along with the non-contingent element. There will be a separate chargeable
gain in three years’ time if the actual consideration received then is higher than the estimate.
Name three assets exempt from CGT.
- An individual’s private residence.
- A private motor vehicle.
- Government bonds held by an individual.
What expenditure on an asset cannot be deducted in calculating a chargeable gain?
Expenditure that is deductible against income or would be if there were any income.
Can a capital loss be carried forward to future years?
Yes
What are the rates of CGT?
10% (basic rate taxpayers) and 20% (higher and additional rate taxpayers) for assets other than non-exempt residential property, otherwise 18% and 28%. A rate of 10% also applies if business asset disposal or investors’ relief is available.
What is the maximum amount of chargeable gains that can qualify for business asset disposal relief in respect of disposals made during 2023/24?
£1m assuming no previous disposals have been made.
Is holdover relief available on a father’s gift of a house to his 25-year-old daughter?
No
Specify 4 CGT reliefs (there are 7).
- business asset disposal relief;
- investors’ relief;
- holdover relief,
- rollover relief;
- rollover relief on incorporation;
- EIS reinvestment relief; and
- SEIS reinvestment relief
When is CGT in respect of the disposal of shares due by?
31 January following the end of the tax year in which the gain is made.
What is the annual capital gains tax (CGT) exemption for a trust for 2023/24 if the settlor has only set up one trust?
£3,000
Trust CGT is 50% of the individual CGT exemption of £6,000
Who is taxed on chargeable gains made by a trust?
The trustees, unless it is a bare trust or a trust for vulnerable beneficiaries.
At what rate are the trustees of an interest in possession trust charged CGT?
At 20%. However, if the gain is on residential property which doesn’t qualify for the private residence relief (PRR), it will be charged at 28%.
At what rate are the trustees of a discretionary trust charged CGT?
At 20%. However, if the property is not subject to PRR, it will be charged at 28%.
