6

Question 1

Who are chargeable persons on capital gains tax

Answer 1

Individuals (residence in the UK)
Business partners
Trustees
Personal representatives

Question 2

Who are non-chargeable persons for capital gains tax

Answer 2

Companies

Question 3

What are examples of non-chargeable assets of CGT

Answer 3

Principal private residence
Motorcars
Chattels sold for less than £6000
Wasting chattels
Winnings from pools lottery
ISA holdings

Question 4

What are chargeable disposals

Answer 4

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

Question 5

What are non-chargeable disposals

Answer 5

Gifts to charity

Question 6

What is basis of assessment

Answer 6

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

Question 7

What is annual exemption deducted from

Answer 7

Net gains to arrive at chargeable gains for the year

Question 8

What are net losses carried forward to set against

Answer 8

Future gains with no time limit. Only offset to reduce net gains to annual exemption limit

Question 9

What happens to losses in year of death

Answer 9

No CGT
Taxed in usual way
Carry back for 3 years (LIFO)

Question 10

What happens to losses and connected persons

Answer 10

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

Question 11

What was indexation allowance

Answer 11

Introduced to individuals and companies to offset impacts of inflation

Question 12

What did taper relief apply to

Answer 12

Disposals by individuals

Question 13

What is a chattel 

Answer 13

Tangible movable property

Question 14

What is a wasting asset

Answer 14

Expected life of less than 50 years

Question 15

What is a Wasting Chattel

Answer 15

Tangible movable property with an expected life of less than 50 years

Question 16

What is a negligible value claim

Answer 16

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

Question 17

What is principal private residence relief PPR

Answer 17

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

Question 18

What is partial exemption

Answer 18

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

Question 19

What is deemed residence

Answer 19

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

Question 20

What is letting relief

Answer 20

Part property let 
Chargeable amount calculated may be covered by letting relief

Question 21

What is business use

Answer 21

If part of property, otherwise exempt as PPR, is used exclusively for business, this proportion of gain on sale will be chargeable