CGT & IHT Rates and allowances

Question 1

What happens to an asset you dispose of to your partner or spouse?

Answer 1

You do not pay tax on that disposal unless

you separated and did not live together at all in that tax year

you gave them goods for their business to sell on

Question 2

What happens to a disposal of an asset to a charity?

Answer 2

No capital gains tax has to be paid unless you sell it to a charity for more than you acquired the asset for

Question 3

What is the capital gains tax free allowance

Answer 3

Gains under £12,300 or £6,150 for trusts

Question 4

What are some reliefs companies can receive for CGT

Answer 4

Entrepreneurs’ Relief (sole traders or business partners)

Rollover Relief (buy a new asset 3 years after disposal of old)

Hold-Over Relief (you used the business asset for trading as a sole trader)

Incorporation Relief (transfer all your business assets in exchange for shares in a company)

Question 5

What is private residence relief

Answer 5

Relief given for the disposal of a residential estate used as the sole residence of owners. The permitted area is exempt from CGT and encocmpasses 0.5 hectares of land and anything else deemed of appurtenance

Question 6

What relief is there for Gifts received on IHT

Answer 6

People you give gifts to will be charged Inheritance Tax if you give away more than £325,000 in the 7 years before your death.

You can give away £3,000 worth of gifts each tax year (6 April to 5 April) without this being added to the value of your estate

Gifts made from 3-7 years up to death have a sliding scale of tax

Question 7

What reliefs are there for IHT

Answer 7

Business Relief
Agricultural Relief
Double taxation relief (taxed in 2 countries)
National Heritage Relief

Question 8

What happens if a loss is made on the disposal of an asset?

Answer 8

This loss would be deducted from the tax gain from that year or added onto your tax free allowance if no gain has been made