CGT

Question 1

Entrepreneur Relief - CGT

Answer 1

Claimed on disposal of all or part of business
>6.4.11 upto 10m during lifetime
Gains set against BR first
Must be owned 2 yes before disposal
Available to sole traders, partners, disposal of shares in trading co if empee or director AND 5% voting rights plus 5%

Question 2

Investors Relief - CGT

Answer 2

External investors
Shares newly issued >16 3 16
Held 3 yrs from 16

Question 3

Holdover Relief - CGT (IHT planning)

Answer 3

Applies to CLT for IHT if settlor doesn’t have interest
No CGT payable immediately
Deferred
Donee’s acquisition cost reduced by held over gain thus increases size of gain
CGT payable when donee disposes of asset
Has to be claimed jointly by donor and donee
Available for gifts of business assets

Question 4

Business Rollover Relief- CGT

Answer 4

Business assets sold
Proceeds reinvested in other assets for the business
Must be trading business
New assets purchased 1 yr before or 3 yrs after disposal
Defers gain until new assets sold

Question 5

EIS Reinvestment

Answer 5

CGT due on disposal 
Can be deferred if reinvested into EIS
Must be within 12 months before it 3 its after disposal 
Deferred until death or disposed of
30% income tax relief (tax reducer)
10/20% CGT relief

Question 6

SEIS Reinvestment

Answer 6

50% CGT due on disposal
Can be exempted if reinvested into SEIS
Limited to 50% of reinvested gain to max 100k

Question 7

CGT Calc

Answer 7

Disposal proceeds
Less acquisition costs + enhancements + cost of sale = Chargeable Gain
Deduct losses in same tax year
Deduct losses brought forward (to allowance level)
Deduct annual allowance
= taxable gain

Gains for ER always 10%
CGT paid same as balancing payment ( 31 Jan after tax year)

Question 8

Wasting Assets

Answer 8

Tangible movable property
Expected life less than 50 yrs
Exempt from CGT
Unless plant/machinery business and capital allowances have been claimed

Question 9

Chattels

Answer 9

Moveable personal property 
Free from tax if disposal less than 6k
If exceeds 6k but less than 15k
Then balance over 6k x 5/3 to give max gain
15k+ calc normal way

Question 10

Principal Private Residence Relief

Answer 10

PPR exempt from CGT
Special rules on periods of absence

IGNORE
Up to a yr btwn buying and living
Any period b4 1.4.82
Any period up to 3 yrs PROVIDED preceded by and followed by periods of residence (sandwich)
Last 18 months (9 months 20) as long as qualified as PPR at some point
Periods of up to 4 yrs if total absence due to employment in uk (sandwich)
Any period working abroad (sandwich)
Any period living in job related accommodation with intention to move back to PPR

Calc

Total gain x
period of occupation / total period of ownership

Question 11

Letting Relief

Answer 11

May be available instead of PPR

Max relief is lower of;

40k
Amt PPR due
Gain made on let part of property

From 2020 only applies if owner shares house

Question 12

Share Identification Rules

Answer 12

Shares purchased in same Co over period of time

Specific order of disposal

Acquisition same day
Acquisition within 30 days
Acquisition in share pool

Question 13

Types of shares

Answer 13

Bonus (scrip) - treated as acquired the same day as original shareholding with no extra cost

Rights issue - existing shareholders buy more. New shares plus acquisition costs added to share pool

Scrip (stock) dividends - dividend paid in shares rather than cash. Treated as new acquisition

Employee share scheme - shares acquired through approved share scheme

Question 14

Part disposal calc

Answer 14

Dispose of part of asset, apportionment formula

(A)Proceeds of part disposed of
(B)mkt value of part retained

A / (A+B) x Original cost = £ to minus from A