9 - capital gains tax (individuals)

Question 1

what needs to be satisfied for a company to be a chargeable person?

Answer 1

they normally pay CT, not CGT and do not receive an annual exempt amount

Question 2

what is an example of an exempt disposal

Answer 2

donating it to charity or a museum, provided it is used for the purpose of the institution

Question 3

what is the main exemption for assets to not pay CGT

Answer 3

motor cars

Question 4

how to calculate the computation for chargeable gain/allowable loss

Answer 4

sale proceeds/market value - incidental costs of disposal - allowable costs

Question 5

what is included in incidental costs of disposal

Answer 5

legal fees, estate agents and auctioneers fees

Question 6

what are allowable costs

Answer 6

acquisition cost of the asset (purchase price, market value if gifted)
incidental costs of acquisition (legal fees etc)
enhancement expenditure (capital costs of addition/improvement)

Question 7

what is the AEA

Answer 7

annual exempt amount

Question 8

how much is the annual exempt amount

Answer 8

12300

Question 9

what is the annual exempt amount

Answer 9

the amount of gains on which no CGT is payable

Question 10

does the annual exempt amount carry forward?

Answer 10

no

Question 11

what are the two rates of CGT

Answer 11

20% if they are a higher or additional rate TP
if a basic rate TP, then 10% on the amount up to the basic rate band unused and 20% on excess

Question 12

what are chattels

Answer 12

an item of tangible moveable property

Question 13

what does a chattel not include

Answer 13

goodwill, shares or leases

Question 14

what is a wasting chattel

Answer 14

a chattel with a predictable life at the date of disposal not exceeding 50 years

Question 15

what are examples of wasting chattels

Answer 15

caravans, boats, computers, mechanical objects and animals

Question 16

what is a non-wasting chattel

Answer 16

a chattel with a predictable life at the date of disposal of more than 50 years

Question 17

what are three examples of non wasting chattels

Answer 17

antiques, jewellery and works of art

Question 18

how do you treat wasting vs non wasting chattels

Answer 18

wasting chattels are exempt, non wasting are not

Question 19

when does a wasting chattel become a non wasting chattel

Answer 19

if it has been used solely in the business, and the owner either has or could have claimed capital allowances on the asset

Question 20

what is the limit of gross disposal proceeds that makes a non wasting chattel exempt

Answer 20

6000 or less (must be acquired for 6000 or less)

Question 21

what are the figures for marginal relief on non wasting chattels to occur?

Answer 21

if disposal if more than 6000 and acquisition was 6000 or less, gain cannot be more than 5/3 x (proceeds excess over 6000)

Question 22

what is a ‘set’ of chattels

Answer 22

when chattels are similar or complimentary items, that are worth more together than separtely

Question 23

what is the process when there is a disposal of one chattel in a set?

Answer 23

a proportion of the cost of the set is allocated to the part being disposed of

Question 24

what is the formula for a part disposal of a non-wasting chattel set

Answer 24

cost x A/A+B
where A is the value of the part disposed of (gross sale proceeds) and B is the market value of the part/parts retained

Question 25

what happens when two or more assets belonging to a set of chattels belonging to the same person are disposed to the same person/persons acting in connection

Answer 25

disposals are computed separately
but treated as one disposal for the purpose of the 6000 exemption and marginal relief