Capital Gains Tax Flashcards
What tax is due on Chattels?
If sale value is between £6000 & £15,000 the chattels rule can be used
Tax is lower of
gain
or Sale price excess over £6000 x 5/3
If sale value under £6000 gain is exempt.
Taxed on full gain is sale value is more than £15,000
CGT annual exempt amount is available
Be careful with inherited property between spouses as original cost is used.
How may HMRC treat a failure to report accurately a Capital Gain?
- May charge a penalty / fine
-If they feel inaccurate reporting is due to lack of reasonable care. - Penalty will be a percentage of correct tax due
- and will be increased if they believe the inaccurate reporting to be deliberate
- penalty may be reduced if the individual tells HMRC about the error
- and cooperates in establishing the correct amount of tax
- The tax due must be paid
How is CGT charged when a spouse has inherited an asset
When asset is inherited asset is taken under spousal “no loss no gain” rule.
Therefore acquisition value is 1st deceased acquision value
What are CGT tax rates
After annual exempt amount has been deducted any remaining gain is taxed at:
10% for basic rate taxpayer (18% if residential property)
20% for any part of gain falling in HRT or ART tax bands
Is the Income Tax personal allowance used to allow some of gan to be tax free.
No - not for CGT purposes
What are CGT implications of transferring investments into a discretionary trust and subsequently to a beneficiary
- transfer to discretionary trust is a disposal for CGT purposes on the Settlor
- taxed at their marginal rate of either 10% or 20%
- Settlor can elect for holdover relief
- because the gift into trust is CLT
- CGT is then deferred until donee disposes of assets
- Trustees would would be liable to CGT at 20% unless;
- they elect for holdover relief on the transfer out of the trust
- with the beneficiaries agreement
Is CGT charged on sale of Gilts?
No
