CGT and IHT Reliefs

Question 1

List the 6 CGT Reliefs

Answer 1

(1) ENTREPRENEURS
(2) INVESTOR
(3) RE-INVESTMENT EIS SHARES
(4) HOLDOVER
(5) BUSINESS ROLLOVER
(6) ROLLOVER ON INCORPORATION OF A BUSINESS

Question 2

List the 3 IHT Reliefs

Answer 2

(1) BUSINESS
(2) AGRICULTURAL
(3) WOODLANDS

Question 3

What do IHT reliefs do?

Answer 3

Reduces Value of Transfer Liable to IHT

Question 4

What CGT relief can be claimed when disposing of a business or part of a business ?

(1) Who can claim this?
(2) How long must the asset have been owned
(3) What is the CGT tax rate on gains
(4) What is the maximum lifetime gain
(5) How do you calculate
(6) When can rental income qualify as a Trading Company?

Answer 4

Entrepreneurs Relief

(1) A Sole Trader, Partner, Employee or Director 5% shareholder in a Trading Company
(2) 2 years
(3) 10%
(4) £10m
(5) Set against BRT band before non qualifying gains.
(6) When providing additional services (laundry, cleaning, meals ) or if it qualifies as a furnished holiday let.

Question 5

What CGT relief can be claimed when external investors sell shares in unlisted trading companies?

(1) How long held
(2) Tax rate
(3) Maximum claim

Answer 5

Investor’s Relief

(1) 3 years, earliest relief available is 2019/20.
(2) 10%
(3) Separate £10m lifetime limit
* designed for attracting new capital so shares must be newly issued when acquired.

Question 6

IHT Business Relief

(1) What assets is it available
(a) @ 100%
(b) @ 50%
(2) How long do the assets have to have been owned for

Answer 6

(1a) 100% on unincorporated businesses, AIM, EIS and SEIS shares
(1b) 50% relief for Controlling Shares in quoted companies or business assets such as land, buildings and machinery
(2) 2 years, less if assets recently inherited

• Assets must be required for business at time of death i.e. not available on large cash holdings
• There should not be a binding contract for sale at the time of death
• Does not apply to companies that deal mainly in investments/property (so excludes a property rental company)

Question 7

What CGT relief can be claimed when trading assets are sold and the proceeds reinvested in new trading assets?

Answer 7

Business Rollover Relief, defers gain until new asset is sold
*New asset must be bought within 12 months

Question 8

What CGT relief can be claimed when gifting Trading Assets or gifts subject to a CLT?

(1) Who eventually pays the CGT and when do they pay it?
(2) Is it claimable if no CLT because gift within NRB?

Answer 8

CGT Holdover Relief

(1) The receiver on disposal using the original acquisition cost
(2) Yes
* Only if gifting to UK residents, both donor and donee must jointly claim.
* Trading Assets include shares if unlisted or donor holds 5% voting rights

Question 9

What CGT relief can be claimed when an unincorporated business is exchanged for shares in new limited company?

Answer 9

Rollover Relief on Incorporation, defers gain until shares sold.

Question 10

If a gain is reinvested in EIS or SEIS Shares, what CGT relief is available?
EIS 
(1) Must be reinvested within
(2) Original gain is deferred until
(3) No CGT on gains built up while ….
(4) No CGT on …
(5) EIS exempt from IHT after held for 

SEIS

(1) ..% exempt
(2) How long can they be carried back
(3) Max per tax year

Answer 10

Reinvestment Relief

Enterprise Investment Scheme

(1) 3 years
(2) EIS sold
(3) in the EIS
(4) death
(5) 2 years

Seed Enterprise Scheme

(1) 50%
(2) 1 year
(3) 100k

Question 11

IHT Agricultural Relief?

(1) What is included?
(2) What is not included?
(3) How long do the assets have to be (a) occupied for or (b) owned if tenant farmers?
(4) Can it be used for lifetime transfers and death?
(5) What % relief is given (a) Owner Occupier (b) landlords with tenancies under 12 months?

Answer 11

(1) Includes Land, Crops, Farm Buildings
(2) Does not include animals or equipment, also excludes development value of land and buildings on their own
(3) (a)occupied for 2 years or (b) owned for 7 years
(4) Yes can be used for lifetime transfers and death
(5)(a) 100% owner occupier (b) 50% landlords with tenancies under 12 months, started pre1995
* Does no apply if there is a binding contract for sale
* If business and agricultural relief available agricultural relief is given first

Question 12

IHT Woodlands Relief?

Answer 12

Timber only not land in UK/EAA
Relief on death only, defers tax until timber disposal
Business or Agricultural relief maybe preferable

Question 13

When does IHT loss relief apply?

Answer 13

When assets fall in value after IHT paid but before sale (shares within 12 months of death and land within 4 years)