Capital Gains Tax

Question 1

Step 1 CGT

Answer 1

Identify chargeable disposal

Question 2

Step 2 CGT

Answer 2

Calculate the gain or loss

Money made - expenditure/cost = gain or loss

Question 3

Step 3 CGT

Answer 3

Consider reliefs and when to apply them

Question 4

Step 4 CGT

Answer 4

Aggregate gains and deduct annual exemption

Question 5

How much is annual exemption for CGT

Answer 5

£12,300

Cannot carry forward

Question 6

Step 5 CGT

Answer 6

Apply correct rates of tax

Separate out different elements

Question 7

Basic rate for CGT

Answer 7

10% of income less than £34,500

Question 8

Higher rate for CGT

Answer 8

20% if income over £34,500

Question 9

Basic rate for property CGT

Answer 9

18%

Question 10

Higher rate for property CGT

Answer 10

28%

Question 11

Rate for entrepreneurs relief

Answer 11

10%

Question 12

What is the special rule for CGT

Answer 12

Disposals between spouses are treated as no gain or loss

Question 13

CGT reliefs

Answer 13

Roll over relief on replacement business asset
Roll over relief on incorporation of business
Hold over relief on gifts of business assets
Entrepreneur relief
Investment relief deferral relief on reinvestment in EIS shares

Question 14

What is principal private residence relief

Answer 14

No tax payable

Question 15

Roll over relief on replacement of qualifying business asset

Answer 15

Gain of asset one is reduced from cost of asset 2
Cannot used annual exemption

Business must be trading, must use old and new assets in business, must buy asset 1 year before or three years after

Must claim this relief in 4 years of the latter the old asset was sold or acquired new asset.

Question 16

Hold over relief on gifts of business assets

Answer 16

Gain deducted from market value
Cannot use annual exemption
If they die without disposing of it the CGT is escaped
Claim within 4 years of the end of the tax year the gift was made

Question 17

Roll over relief on incorporation of a business

Answer 17

S162
Business must be sold as a going concern in return for shares only. Transfer all assets (except cash).
Deduct from value of shares the gain in the value of the business

Question 18

Entrepreneur relief

Answer 18

10%
10million lifetime cap
Can use with annual exemption but not roll over
Claim within 4 years
Must be selling shares of your business you have at least 5% shares and 5% voting rights
Must have held them for minimum of 1 year
Assets of business that has ceased or you are leaving

Question 19

Investors relief

Answer 19

Shares must be subscribed for cash and paid up
10%
10 million lifetime limit
Must have had shares for minimum of three years

Question 20

Deferral relief on reinvestment on EIS shares

Answer 20

Unlimited deferral