Capital Gains Tax - individuals Flashcards
When is there a chargeable gain/allowable loss?
Asset increased in value since being acquired
Asset decreased in value since being acquired
What is the first step in deciding if there is a chargeable gain?
Whether a chargeable person has made a chargeable disposal of a chargeable asset
Who are exempt from capital gains?
Charities and pension schemes
What is included in a chargeable disposal?
The sale or gift of the whole or part of an asset
What disposals are exempt from CGT?
Gifts to charity, art galleries, museums etc
Death
What is the date of disposal?
The date the contract for a sale is made
What assets are exempt from CGT?
Cash
Motor cars
Wasting chattels
Chattels with gross disposal consideration < £6000
Gilt-edged securities
National savings certificates and premium bonds
ISAs
How are chargeable gains/losses calculated?
Gross disposal consideration
Less costs of disposal
Less allowable costs
When is the gross disposal considered as the gross sale proceeds or market value?
When sold at arm’s length
Gifted
What costs are allowable?
Acquisition costs - purchase price, market value for gift, probate value at death
Legal fees, stamp duty etc
Improvements
What is the annual exempt amount?
£3000 for all individuals deducted from chargeable gains
How is capital gains tax calculated?
As if gains were the top of income
Work out how much is left in the basic rate band (37700 - TI)
What are chattels?
An item of tangible, moveable property exempt from CGT
What is a wasting chattel and non-wasting chattel?
An asset with a predictable life of < 50 yrs
caravans, boats, plant and machinery, animals
An asset with a predictable life of > 50 yrs
antiques, jewellery, art
What are the rules for non-wasting chattels?
If asset disposed of and acquired for < 6000 it’s exempt
If purchase price < 6000 and sale proceeds > 6000, lower of gain and 5/3(GDP - 6000)
If purchase price >6000 and sale proceeds <6000, loss = paid - 6000
If purchase price >6000 and sales proceeds >6000, normal CGT
How is chargeable gain from a set of chattels calculated?
Proceeds of disposal - cost to sell
Cost = cost of set x gross proceeds/(gross proceeds + remaining cost)
Net proceeds - cost
How are chargeable gains to connected people calaculated?
Work out gain for each disposal
Work out total proceeds
Apply chattel rules
Apportion between people
