CGT Reliefs

Question 1

what are the rules for SEIS investment relief?

Answer 1

SEIS relief is an exemption.
- reinvestment needs to be made within the same tax year.
- SEIS relief can claim 50% of the investment or gain whatever is lower.

If sold before 3 years:
- all of the gain exempt becomes chargeable

If sold after 3 years:
- gain on disposal will be exempt
- no clawback of income relief
- if loss is made, it will be allowable but reduced by the SEIS income relief obtained

Question 2

what relief is available for investing in EIS shares?

Answer 2

• selling an asset and investing in EIS shares the gain is deferred until the shareholder becomes non UK resident. The shares must be held for 3 years.
• shares must be acquired within 12 months prior to disposal and after 36 months after.

Question 3

what are the conditions for SSE to apply?

Answer 3

• disposal must be from a holding of a least 10% of the company
• shares have been held for a continuous period of 12 months at some point in the last 6 years before disposal.
• gain will be exempt from CGT

Question 4

what are the rules for incorporation relief?

Answer 4

incorporation relief will apply if:
- the business being transferred is a going concern and all of the assets of the business except cash will be transferred to the new company.

• if business is exchanged for shares, then full gain is deferred.
• if business is exchanged for cash then gain is not deferred and chargeable to CGT now.

Question 5

what asset disposals qualify for BADR @ 10% on the first £1m.

Answer 5

• transfer of unincorporated business
• shares in personal company, owner must own at least 5% for 2 years and be employee
• asset disposed of within 3 years of business ceasing to trade
• asset disposed of at the same time leaving company- assets must have been owned for at least 2 years and not rented out at full rates.
• EMI shareholding.

Question 6

what is rollover relief?

Answer 6

• indiv or company can defer gain on land, buildings, fixed P&M and goodwill on incorp business, that have been used by the business if they reinvest proceeds into another qualifying asset in a 4 year time window.
• replacement asset must be purchased one year before and 3 years after. claim date within 4 years.
• if some of proceeds are reinvested then chargeable gain is lower of:
• the amount of the proceeds not reinvested, and
  – the full gain.

if Invested in:
non dep asset- reduce base cost of asset by the amount of gain deferred.
if dep asset- the gain deffered will be charged at the earliest ofL
- the disposal of the asset
- 10 years passing since the purchase of the new asset
- asset 2 no longer being used for trade purposes

Question 7

what is gift holdover relief?

Answer 7

• gifting business to or shares to a family member. gain on disposal could be deferred until 2nd person sold the business or share. need to claim within 4 years.

qualifying assets:
- assets used in trade of donor
- unquoted trading shares/securities
- quoted shares/securities of donors personal company

Question 8

what is investors relief?

Answer 8

relief for sale of shares in unquoted trading company by someone not employee and had them for over 3 years from 6 April 2016

• shares acquired and disposed on or after 17 march 2016
• 10% tax on first £10m of gains.

Question 9

what is letting relief?

Answer 9

Letting Relief is lower of:
-40k
- PRR given
- the gain relating to the let period
max 40k

Question 10

what is PRR relief?

Answer 10

gain on property fully exempt. partial gain available if working abroad.