Capital Taxation Flashcards
What is the Current Rate of IHT?
40% above £325,000
What is the Valuation Date for CGT?
Date of acquisition and disposal
If bought before 31 March 1982 then that is the acquisition date
How is Capital Gains Tax calculated?
Disposal Proceeds
LESS acquisition costs and allowable expenditure (eg selling costs)
= chargeable gain
What are the current SDLT Rates?
No SDLT up to £250,000
Next £675,000 - 5%
Next £575,000- 10%
over £1.5million- 12%
When are the current SDLT rates effective from?
23 September 2022
Result of the mini-budget
What is the annual allowance for CGT?
£12,300 per individual
£6,150 per trust
What are the current rates of CGT?
Individual Residential- 18-28%
Individual Non-Residential- 10-20%
Companies- 19%
What is the basis of value for IHT?
Market value as defined within Section 160 of the Inheritance Tax Act 1984
Amount a property is estimated to exchange for in an arms length transaction between willing buyer and seller on the valuation date
NOT taking into account any flooding of the market
CAN take into account special purchaser (IRC v Clay 1914)
What are the assumptions for market value for IHT?
- Sale is hypothetical
Buyer and seller are hypothetical, prudent, and willing - Divide lots to achieve highest price
- Method of sale to achieve best price on the open market
- Special purchaser must be known at valuation date
Talk me through the case of IRC vs Clay
Established that a special purchaser could be taken into account
Parties established that a residential property was only worth £750 on open market but higher value to neighbouring care home could be considered
Talk me through undivided shares
Where the taxpayer does not own 100% of the share in the property
- Established in Wight v Moss
Two women who occupied property, other woman still in occupation and therefore 15% adjustment applied - Exercised in James Anston St Claireford 2006
10% adjustment applied as co owner not in occupation
Calculate market value then deduct 10% if co owner not in occupation, 15% if are in occupation/ have right to occupation
What are the current thresholds for IHT?
£325,000 nil rate band
further £175,000 residence nil rate band if passed to linear relative
Talk me through prudent lotting
Where estate can be divided to achieve the best value- Duke of Buccleuh 1966
In IRC v Clay- Estate not divided as was established it would achieve maximum value as entire estate
Consider all options
When lotting the property in Croydon, did you consider any implications?
Considered own access and services to each unit
Considered the fact the title may need to be split- potential timeliness however considered costs to be diminimus
When is IHT payable?
6 months after date of death
