Capital Gains Tax Flashcards
who is a chargeable person?
- individuals who pay capital gains tax
- companies pay corporation tax on their gains
what assets are exempt from chargeable assets?
- cash
- motor cars
- gilt edged securities (loans issues by uk government) and qualifying corporate bonds
- National Saving Certificates/premium bonds
- prizes and betting winning
- assets held in ISAs
- certain type of chattels
- trading inventory
- receivables
what is a chargeable disposal?
- change in ownership
- eg. sale, gift, exchange, loss or destruction of asset
give some examples on not chargeable disposals
- to a charity
- on death
- between spouses or civil partners
how do we determine the date of disposal?
- when the contract is made OR
- if the contract is conditional, the date when all conditions are met
what is the difference between a chargeable gain and taxable gain?
gain stated before the annual exempt amount has been deducted
whats the annual exempt amount?
- £6000
- cant be carries forward
what are the rates for CGT?
- BRTP - 10%
- HRTP/ARTP - 20%
what are chattels?
are tangible moveable property. eg. a picture or table
what is a wasting chattel and how is it treated in terms of tax?
- expected life doesn’t exceed 50 years
- eg caravan, boat, animals, plant & machinery
- exempt from CGT
what is a non wasting chattel and how is it treated in terms of tax?
- expected life more than 50 years
- eg antiques, jewellery, paintings
- special rule applies
what is the rule if the gross proceeds and cost of non wasting chattels < £6000?
exempt
what is the rule of the gross proceeds and cost of non wasting chattels > £6000?
taxable as normal
what is the rule of the gross proceeds is <£6000 and cost is >£6000?
marginal loss is restricted: gross proceeds deemed to be £6000
what is the rule if gross proceeds is >£6000 and cost <6000?
Marginal gain is restricted to lower of
- normal gain
- 5/3 x (gross proceeds - 6000)
what are gross proceeds?
sales proceeds before deducting any incidental costs of disposal
what is the cost?
original acquisition cost including cost of purchase eg auctioneer’s fees
what is the cost formula?
Cost × A/(A+B)
where A is the market value of the item(s) disposed of, and B is the market value of the elements of the set that have been kept.
