Capital Gains Tax

Question 1

When is capital gains tax paid?

Answer 1

on receipt of money that originates from a one-off sale

Question 2

What is a foreign sale?

Answer 2

sale of asset situated abroad

if individual is UK resident:
they must pay tax on foreign capital gains they receive during the tax year

Question 3

When is a taxpayer deemed to be a UK resident?

Answer 3

if they have spent at least 183 days in the UK during the relevant tax year

Question 4

What is Step 1 of a full CGT calculation?

Answer 4

calculate sale of proceeds of each asset:

1. capital income/receipts= income from one off sales not part of regular business activity

if assets:

2. transferred as a gift, sold at an undervalue or sold to connected person, use market value instead.
3. Exempt capital:

Principal private residences

cars for private use

tangible moveable property less than 6k

disposal of some investments: govt securities, NS certificates, ISAs and Life assurance policies.

disposals to charities

spouses transferring assets to each other.

Question 5

What is Step 2 of a full CGT calculation?

Answer 5

subtract disposal expenditure:

sale proceeds - disposal expenditure = Net Sale proceeds

disposal expenditure: costs of disposal