Capital Gains Tax Individuals Flashcards
What is the relevant year for CGT?
April 6 - April 5th (the tax year not financial)
What 4 things happen to give rise to a CGT charge?
Chargeable disposal of
Chargeable asset by
Chargeable person which
Gives rise to a chargeable gain
When is CGT tax due?
On or before the 31 January of the following tax year when the disposal occured
What are the 2 most common instances of a chargeable disposal?
Sale of an asset
Lifetime gift of an asset
Is CGT charged on death?
No
What is a chargeable asset?
Everything except for:
Principal private residence
Motor cars for private use (incl. vintage)
Certain investments
UK sterling
What are examples of the most common investments that are not considered chargeable assets?
Government securities
National Savings Certificates
Shares and securities held in individual savings accounts like ISA’s
Life assurance policies
What does it mean there must be a chargeable gain?
You must sell the asset for more money than you paid for it
Does a gift to a spouse incur CGT?
No
What happens if you make a disposal to a connected person?
HMRC will calculate the market value, and you will be CGT taxed on that market value regardless of what the connected person paid for it
Who are connected persons for CGT purposes?
Direct lineal ancestors, not lateral ancestors
Companies under common control
Partners in business
How do you calculate the chargeable gain?
Money made - money paid = gain
What 3 categories of expenditure can be deducted from the chargeable gain?
Disposal (e.g,. agent commission)
Initial (e.g., survey)
Subsequent (to enhance value, preserve asset etc)
How can you use capital losses to your tax advantage?
You can offset gains from losses
How far forward can capital loss allowances be carried?
They never expire, but you have to use them at the first available opportunity/gain
What is the annual exemption amount for ‘24?
3K
Who is entitled to the AE?
All individuals
No companies
When do you apply AE in your calculation?
After deductions and capital loss allowances
Do companies pay CGT?
Technically they pay ‘corporation tax on chargeable gains’
Are charities exempt from CGT?
Yes
What are the CGT rates for individuals?
Basic rate: 10%
Higher and additional rate: 20%
Explain how CGT tax rates for individuals are apportioned between the income bands
When taxable income + total taxable CGT after deductions = less than 37,700 CGT rate is 10%
When taxable income exceeds basic rate CGT rate will be 20%
When taxable income is less than 37,700, but combined with taxable gains is above 37,700 then the part of the gains above 37,700 will be charged at 20%
How do you calculate the taxable chargeable gain?
Sale proceeds - disposal expenditure - initial expenditure - subsequent expenditure - carry forward losses - annual exemption
How do you calculate net sale proceeds?
Sale proceeds - disposal expenditure
How do you calculate total chargeable gain?
Net sale proceeds - initial spending - subsequent spending
