Capital gains tax Flashcards
How is a taxable gain taxed if it straddles BRT and HRT?
It would be taxed proportionately at the lower and higher rates
Are non-taxpayers able to offset their capital gain against any unused PA?
No
Can the annual exemption be carried forward to future years?
No
By what dates must CGT liabilities be paid?
31 January of the following tax year; or
within 60 days if a residential property sale
What is the formula for calculating the gain on a main residence that is exempt from CGT?
(Period of actual or deemed occupation/period of ownership)*gain
What situations are considered deemed occupation?
-First 24 months if completing construction or a delay in selling previous residence
-Any period of absence not exceeding three years (as long as sandwiched between actual occupation periods)
-Any period working away in the UK not exceeding four years (as long as sandwiched between actual occupation periods)
-Any period working abroad indefinitely (as long as sandwiched between actual occupation periods)
-Last nine months
What is lettings relief?
Allows someone who lets out their primary private residence to claim CGT relief if they share occupancy with the tenant
What costs can be deducted from a gain?
Initial acquisition costs
Costs of improving/enhancing the asset
Disposal costs
Can maintenance/repair costs be deducted from a gain?
No
What is the calculation for deemed acquisition cost?
[a/(a+b)]*v
where a is the part being disposed of, b is the part being retained, and v is the original cost of the asset
In what situations can losses be offset against gains?
If they are made against chargeable assets or EIS/SEIS
Can excess losses beyond that of the annual exemption be carried forward to future gains?
Yes
Over what time period must losses be registered
Within 4 years of the end of the tax year in which the loss was made
What is the qualifying criteria for investor’s relief?
Available to long-term external investors in unlisted trading companies
£10m lifetime limit
Investment must be made on/after 17th March 2016
Investment must be owned for at least three years
Qualifying gains subject to 10% tax rate
How do inter-spousal transfers work?
Husband buys asset for £x –> husband transfers asset to wife at value £y –> wife sells asset for £z –> chargeable gain treated as £(z-x)
Who must claim holdover relief, and in what time limit?
Both the donor and the receiver must claim within four years
Where holdover relief is used, what portion of the gain is used for CGT purposes?
The whole gain based on the original purchase price the donor paid
What criteria must an individual meet to qualify for holdover relief?
Sole-trader/partner; or have ≥ 5% voting rights in a company; or use the assets in their business
Describe the process used for business rollover relief
Business asset sold –> new business asset bought within 3 years of sale –> new business asset sold –> disposal for CGT purposes using overall gain on combination of business assets
Describe the process used for deferral relief
Chargeable asset disposed of –> gain invested into an EIS 12months before or within 3 years of disposal –> EIS shares disposed of –> disposal for CGT purposes (not exempt)
How long does an investor have to claim deferral relief?
5 years after the first 31st January
