Capital Taxation L3 TCGA Flashcards
What areas does VPGA 15 cover?
UK VPGA 15 Valuations for Capital Gains Tax, Inheritance Tax, Stamp Duty Land Tax and the Annual Tax on Enveloped Dwellings
For your awareness:
Where to find the defintions of basis of value for areas covered by VPGA 15.
- Definitions of the basis of value for:
- Capital Gains Tax (CGT) can be found in section 272, Taxation of Chargeable Gains Act 1992
- Inheritance Tax (IHT) in section 160, Inheritance Tax Act 1984
- Stamp Duty Land Tax (SDLT) in section 118, Finance Act 2003 and
- the Annual Tax on Enveloped Dwellings (ATED) in section 98(8) of the Finance Act 2013.
What Act Covers Captial Gains Tax (CGT)?
Taxation of Chargable Gains Acts 1992
What is captial Gains Tax?
A taxation on the captial gain of an asset between the aquistion and disposal MINUS allowable expenses such as improvment costs
What is the Statutory Definition of Open Market Vlaue as found in s.272 of TCGA 1992?
As refered to in your Level 2 second example (Industrial Warehouse Case in Cambridge)
The staturtory defintion found in s.272 of TCGA 1992 is - the price a property might reasonaby fetch on the open market disregarding Flooding of the Market
What is the rate of Tax for Capital Gains?
- There is an £3000 annual allowance for indivisuals and £1500 for Trusts - After that
- Basic Rate Taxpayers Cap Gains Tax is charged at: 10% for Commercial Property and 18% for Residential Property
- Higher Rate Taxpayers Cap Gains Tax is charged at: 20% for Commerical Property and 24% for Residential Property
- Companies Corperation Tax is charged at 19% for both
Remeber its MINUS allowable expenses
What Relief is there from Capital Gains Tax?
Taxation of Capital Gain Act 1992
Think Level 3 First Example
- Private Residence Relief - 100% within permitted area
- Roll Over Relief - Gains must be reinvested in another qualifying asset within 1 year
- Entrepreneur Relief - 10% Relief with a lifetime limit of £1m - related to business premise owned for at least 2 years
P R E
What is the date of valuation for Taxation of Chargable Gain Act?
1982 RULE
If aquired before 31 March 1982 that is considered to be the valuation date
If purchased after the 31 March 1982, it is the actual date of aquistion and date of disposal rebased
How does the definition of Market Value differ form the Red Book VPS 4?
UK VPGA 15 States
UK VGPA 15 states that - Market Value definition is different to the Red Book VPS 4 because it is subject to interpretation by case law
Can you talk me through the 5 steps of a Private Residence Relief Case?
- Determine the Entity of the ‘Dwelling House’
- Determine the extent of ‘Gardens and Grounds’
- Determine the size of ‘Permitted Area’
- Determine the loccation of the ‘Permitted Area’
- Apportion the proceeds of the aquisition and disposal between the area that does and doesn’t qualify for relief
First two steps done my HMRC
Can you explain how you undertook your valuation and apportionment for you Herefordshire PRR Case?
I apportioned the consideration into constituent values of the value of all parts based on the open market value using comparable evidence
Tell me about Lewis v Lady Rook [1992], how did this case law inform your Hertfordshire TCGA case?
In Lewis v Lady Rook the Court of Appeal accepted that a dwelling house may consist of more than building if it is appurtenant to and within the curtiliage of the main house
This case informs step 1 & 2 which are determined by HMRC but in some cases they can ask for advice and in this case they did due to annex and stables
Tell me about Longson v Baker [2001], how did this case inform your TCGA case in Hertfordshire?
In Longson v Baker the High Court held the equestrian characteristic of Dr Longson’s 7.5ha property was not required for reasonble enjoyment, and permitted 1ha was permitted reasonble enjoyment.
What are the current SDLT rates in the UK?
The current SDLT rates are stepped
0% on the first £0-£250K
5% on £250K-£925K
10% on £925K - £1.5M
12% over £1.5M
