9 - capital gains tax (individuals) Flashcards
what needs to be satisfied for a company to be a chargeable person?
they normally pay CT, not CGT and do not receive an annual exempt amount
what is an example of an exempt disposal
donating it to charity or a museum, provided it is used for the purpose of the institution
what is the main exemption for assets to not pay CGT
motor cars
how to calculate the computation for chargeable gain/allowable loss
sale proceeds/market value - incidental costs of disposal - allowable costs
what is included in incidental costs of disposal
legal fees, estate agents and auctioneers fees
what are allowable costs
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)
what is the AEA
annual exempt amount
how much is the annual exempt amount
12300
what is the annual exempt amount
the amount of gains on which no CGT is payable
does the annual exempt amount carry forward?
no
what are the two rates of CGT
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
what are chattels
an item of tangible moveable property
what does a chattel not include
goodwill, shares or leases
what is a wasting chattel
a chattel with a predictable life at the date of disposal not exceeding 50 years
what are examples of wasting chattels
caravans, boats, computers, mechanical objects and animals
what is a non-wasting chattel
a chattel with a predictable life at the date of disposal of more than 50 years
what are three examples of non wasting chattels
antiques, jewellery and works of art
how do you treat wasting vs non wasting chattels
wasting chattels are exempt, non wasting are not
when does a wasting chattel become a non wasting chattel
if it has been used solely in the business, and the owner either has or could have claimed capital allowances on the asset
what is the limit of gross disposal proceeds that makes a non wasting chattel exempt
6000 or less (must be acquired for 6000 or less)
what are the figures for marginal relief on non wasting chattels to occur?
if disposal if more than 6000 and acquisition was 6000 or less, gain cannot be more than 5/3 x (proceeds excess over 6000)
what is a ‘set’ of chattels
when chattels are similar or complimentary items, that are worth more together than separtely
what is the process when there is a disposal of one chattel in a set?
a proportion of the cost of the set is allocated to the part being disposed of
what is the formula for a part disposal of a non-wasting chattel set
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
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
disposals are computed separately
but treated as one disposal for the purpose of the 6000 exemption and marginal relief
