CGT reliefs Flashcards
Rollover relief
defers payment of tax on gains on disposal of qualifying business asset whilst trade is carried on as rolled over into base cost of replacement asset
Rollover relief - Qualifying business assets
Land and buildings
Yes - if occupied and used for trade purposes
Rollover relief -Qualifying business assets
Fixed plant and machinery
Yes
Rollover relief - Qualifying business assets
Ships aircraft and hovercraft
Yes
Rollover relief - Qualifying business assets
Satellites, space station and space craft
es
Rollover relief - Qualifying business assets
Goodwill
Yes - for sole traders and partners, not for companies
Rollover relief - asset must be acquired in
1-3 years of disposal of the first asset
Claim for rollover relief must be made within
the later of four years of the end of the tax year in which the gain is realised or new asset acquired
Rollover relief - depreciating assets
Gain not rolled over by reducing cost, but deferred until crystallises on earliest of:
- disposal of replacement
- 10 years after replacement acquired
- Date replacement asset ceases to be used in trade (not on death)
Gift relief
claim may be made for gain arising on gift of business asset to be deferred until recipient disposes of asset at later date
Gift relief - qualifying assets
Assets used in business carried on by donor’s personal company (>5% voting rights)
Yes
Gift relief - qualifying assets
shares / securities in trading company where unquoted or donor’s personal company
Yes
Gift relief - qualifying assets
gift of shares / securities where donee is company
No
How does gift relief work
deemed cost of acquisition (MV at date) reduced by amount of gain that would have been chargeable, causing higher gain in future
Restriction on gift relief on shares in a personal company gain =
gain * Chargeable business assets/Chargeable assets
Gift relief - Any excess of actual consideration over base cost is
immediately chargeable, remaining gain subject to gift relief
BADR - Qualifying assets
All or part of trading business individual carries on alone/in parternship
Yes
BADR - qualifying assets
assets of individual’s or partnership’s trading business following cessation of business
Yes
BADR - qualifying assets
Shares (and securities of) individuals personal trading company (or holding company of trading group)
Yes
Personal trading company criteria
Individual owns at least 5% share capital and exercise at least 5% of voting rights and EITHER or BOTH:
- Holding makes individual beneficially entitled to at least 5% of profits for distribution to shareholders and on winding up 5% of assets AND OR
If all ordinary shares disposed, individual beneficially entitled to at least 5% of proceeds
BADR - Share disposal criteria - individual must be
officer or employee of the company, or a company within the same group
BADR - Ownership period - asset must have been held for a period of
two years
if cessation - asset must have been disposed of within 3 years of cessation
BADR - assets owned personally but used in business - disposal
does not qualify for releif
BADR - Calc
Net gains and losses in respect of business disposal
tax at 10% after deducting loss and AE
BADR - lifetime limit
£1 million for disposals on or after 11 March 2020
BADR lifetime limit prior to 11 March 2020
£10 million
Time limit for claiming BADR
12 months from 31 January following tax year in which qualifying disposal is made
BADR - Election if cease to be personal company - conditions
- new issue result in company ceasing to be personal company
immediately prior to issue, if shareholder disposed all shares, BADR would have been available
BADR - Election if cease to be personal company - if election is made
individual deemed to sold all shares immediately before issue, then re-acquired at market value
Further election to defer gain until actual disposal in future
If BADR and gift relief both claimed, which first?
Gift relief first
then BADR
Investors relief applies to
Disposals of certain qualifying shares by individuals, disposals charged at 10% regardless of cinome
Investors relief - qualifying shares
shares must:
- have been subscribed for as new ordinary shares by disposer
- be in unlisted trading company/holding company of trading group
- have been issued on or after 17/03/16
Been held continually for 3y before disposal, starting from later of acquisition at 6/4/17
Investors relief - lifetime limit
£10m
Private residence relief
allows some or all gain of disposal of private residence to be non-chargeable to CGT
Private residence
Taxpayers only/main residence, including grounds or gardens up to half a hectare or such as is required for enjoyment of house having regard to size and character
Periods of deemed occupation are:
Any periods of up to 3 years of absence for ay reason
any periods where individual was required to live abroad
any period up to 4 years required to live elsewhere due to work
any period up to 24 months if prevented living there due to being built/altered/necessary steps to dispose of previous residence
Periods of absence must be
proceeded by period of actual occupation and followed by occupation, but not required to resume residence if terms of employment to work elsewhere
Can claim PRR on business use?
No - will get last 0 months if it was at some point used for non-business
Letting relief
if property occupied as price residence is disposed of and some gain chargeable, letting relief may be available if property has been let out and there has been shared occupation
Letting relief is the lowest of
letting gain
PRR
40,000
Letting gain =
shared occupation / total * gain
