Capital tax relief

Question 1

What is replacement of business asset relief and what are the two types?

Answer 1

Gain from disposal of qualifying business assets can be deferred if they are reinvested within period

Rollover relief: rollover base cost of new asset
Holdover relief: freeze gain until chargeable if proceeds used to purchase depreciating asset (max UL of 60yrs)

Question 2

What is a qualifying asset and qualifying period? What is the base cost?

Answer 2

QA= L&B, fixed P&M, ships, aircraft
QP= 1 year before, 3 year after sale (4 year from whatever comes first, sale/purchase)

Base cost= New asset - deferred gain

Question 3

In terms of replacement of business asset relief, what is chargeable and what is the period? (ROBA)

Answer 3

Lower of amount not reinvested and full gain from disposal.

Also private portion of asset is immediately chargeable

If asset purchased before disposal, must be claimed within 4 years

Question 4

What is gift relief given on?

Answer 4

When you gift asset, gain not realised until donee sells asset. Gifts include assets used in trade by donor or unquoted trading shares or quoted shares on personal company (min 5% voting right)

Gift includes sale at undervalue- relief on cash on anything over cost

Question 5

What is BADR? What are qualifying disposals? Give tax dates

Answer 5

First £1m on gains in individuals lifetime on disposal of qualifying assets taxed at 10% for everyone

QD- major part of unincorporated trading business.
- assets within 3 years ceasing to trade
- shares in personal company

must be held 24 months and claimed in 12 after 31 jan

Question 6

What is investors relief?

Answer 6

Extends BADR to £10m in relation do disposal to STUNT
* Subscribed (new issued shares)
* Trading company
* Unlisted
* Not worked there
* Three years owned