6 Flashcards
Who are chargeable persons on capital gains tax
Individuals (residence in the UK)
Business partners
Trustees
Personal representatives
Who are non-chargeable persons for capital gains tax
Companies
What are examples of non-chargeable assets of CGT
Principal private residence
Motorcars
Chattels sold for less than £6000
Wasting chattels
Winnings from pools lottery
ISA holdings
What are chargeable disposals
Sale of part of a chargeable assets
Gift of a chargeable asset
Loss/destruction of the chargeable asset
Receipt of a capital sum derived from a chargeable asset
What are non-chargeable disposals
Gifts to charity
What is basis of assessment
Tax years (6 April – 5 April)
Each gain is calculated separately and then aggravated to give net gain or net loss for the year. Net gains are then reduced by losses brought forward or brought back
What is annual exemption deducted from
Net gains to arrive at chargeable gains for the year
What are net losses carried forward to set against
Future gains with no time limit. Only offset to reduce net gains to annual exemption limit
What happens to losses in year of death
No CGT
Taxed in usual way
Carry back for 3 years (LIFO)
What happens to losses and connected persons
Can only be set against future gains on disposals to same person.
Not allowed if deemed to be as a result of arrangements made by taxpayer to artificially create loss
What was indexation allowance
Introduced to individuals and companies to offset impacts of inflation
What did taper relief apply to
Disposals by individuals
What is a chattel 
Tangible movable property
What is a wasting asset
Expected life of less than 50 years
What is a Wasting Chattel
Tangible movable property with an expected life of less than 50 years
What is a negligible value claim
Usually on shares – company in receivership/liquidation but not yet complete. Can claim shares are worth 0. Set loss off against another gain. If any proceeds from shares, cost is treated as nil
What is principal private residence relief PPR
Gains not chargeable but losses not allowable
Must be actual residence Unless living in job-related accommodation
Taxpayer and married couples can only have one PPR at a time
What is partial exemption
If there are periods when someone is not living in their property, a CGT computation must be completed when property is sold. Part of gain will be exempt
What is deemed residence
Period which is counted as residence for CGT. Only applies if actual resident is a taxpayer working abroad for up to 4 years or any other absence up to 3 years. need to have actual residence before and after deemed residence
What is letting relief
Part property let 
Chargeable amount calculated may be covered by letting relief
What is business use
If part of property, otherwise exempt as PPR, is used exclusively for business, this proportion of gain on sale will be chargeable
