CGT Flashcards
Steps for reporting a loss to HMRC?
You can claim up to 4 years after the end of the tax year when the asset was disposed of.
It only needs to be reported if the loss is more than 4 times the annual exempt amount.
Or if the taxpayer concerned wishes to offset against chargeable gains.
The 5 CGT reliefs?
- Entrepreneurs’ relief
- Holdover relief
- Business rollover relief
- Rollover relief on the incorporation of a business
- Re-investment into EIS or SEIS shares
CGT on chattels?
If disposal proceed exceeds £6,000 but is no more than £15,000:
Maximum gain is: 5/3 x (surplus over £6,000)
What are chattels?
The word ‘chattel’ is a legal term meaning an item of tangible, movable property – something you can both touch and move. Your personal possessions will normally be chattels.
Including:
items of household furniture
paintings, antiques, items of crockery and china, plate and silverware
motor cars, lorries, motorcycles
items of plant and machinery not permanently fixed to a building
Private cars are exempt from Capital Gains Tax and many chattels having only a limited lifespan are also exempt. (See the guidance on wasting assets in parts 4 and 5 below.) But if you dispose of any other chattel, you may be liable to Capital Gains Tax.
Sets of chattels?
The normal rules for calculating gains or losses on the disposal of a single chattel may not apply if you dispose of a ‘set’ of chattels.
What is a set
A set is a number of chattels that are:
similar and complementary to each other worth more together than separately.
Examples of sets may include:
chessmen
books by the same author, or on the same subject
matching ornaments such as vases or statuettes
What happens when you dispose of a set
If you dispose of a number of chattels that form a set, the £6,000 limit that normally applies to a single chattel, applies to the set.
There are special rules that apply to sets which have been broken up and sold separately.
If the parts of the set were:
owned by you at the same time
disposed of by you to the same person, or a number of people acting together, or a number of people who are connected
Then the £6,000 limit applies to all of the set collectively and not to each member of the set individually.
Main residence exemption
Proportion of gain exempt from CGT
Total gain x period of occupation* / total period of ownership
- plus actual and deemed occupation
Period of absence?
A delay of up to 1 yr between purchase and moving in.
Any period prior to 1 April 1982.
Up to 3 yrs if preceded and followed by residence.
Last 18 months of ownership if property was used as the individual’s main residence at some time.
Up to 4 yrs where individual was employed elsewhere in the UK.
Periods working abroad if preceded and followed by residence.
Periods living in job related accommodation.
Principle private residence
Period of non occupation ignored?
Any time prior to 1st April 1982
Last 18 months if used as private residence at some point
Up to 4 years if individual employed elsewhere in the UK
Up to 3 years if proceeded followed by residence
Delay up to 1 year between selling and moving to new residence
Total period living in job related accommodation ignored
Private main residence, periods that always qualify for relief.
Periods that always qualify for relief
No matter how many homes you own or where you lived at the time, you always get relief for:
the last 18 months before you sold your home
the first 12 months you owned the home if it was being built, renovated or you couldn’t sell your old home
You must have lived in the home as your only or main residence at some point while you owned it.
You get relief for these periods even if you nominated a different home as your main home.
If you have one home or you nominated your home
You get relief if you were away from it for:
any reason for periods adding up to 3 years
up to 4 years if you had to live away from home in the UK for work
any period if you were working outside the UK
You must have lived in the home before and afterwards, unless your work prevented you.
If you only own one home you get relief for the last 36 months before you sold your home if any of the following apply:
you’re disabled
you’re in long-term residential care
you sold the property before 6 April 2014
Part disposal of land? Deductible base cost calculation.
Deductible base cost:
C x A/(A+B)
C: total, original cost of the whole asset
A : gross proceed of the part sold
B: value of the unsold part
How are previous and current year losses treated for CGT purposes?
Current losses must be offset against current year gains,(1) even if this results in the full annual exemption not being used (1)
Previous years’ losses can also be used to offset gains, but they do not have to be used in full. / sufficient losses can be used to reduce the gain down to the annual exemption limit (1)
Unused losses can be carried forward indefinitely (1)
But must be claimed within 4 years of the end of the tax year to which they relate (1)
