Ch 6/7/8/9 - CGT Comp & Stamp Duty

Question 1

CGT= Charged on chargeable gains arising on:

Answer 1

-Sale of gift or asset
-Loss or destruction of asset
-etc.

Question 2

Chargeable assets = All assets are chargeable unless specifically exempted (outside scope of CGT)

Exempt assets:

Answer 2

-Cars
-Prizes and betting winnings
-ISAs
-Certain chattels (tangible moveable property with proceeds/value <£6000)

Question 3

Chargeable persons:

Answer 3

-Individuals
-company partners
-Companies (only pay Corp tax on gains - not CGT)

UK resident individuals pay CGT on worldwide chargeable assets.

Question 4

Capital Gains comp

Answer 4

SP or MV. X
Less: costs of sale. (X). Legal fees

Less Purchase price. (X)
Less legal costs at purchase (X)
Less enhancement expenditure (X). (I.e extension cost - not repairs)

Less relief available. (X). Letting relief, Gift holdover relief, ROR, Inc relief)
Less (X). EIS/SEIS reinvestment relief
Less AEA. (X)

Taxable gains. X

Question 5

CGT rate of tax:

Answer 5

Basic= 10% on gains falling within unused basic rate band
20%= on excess

Higher/Additional= 20%

UK residential property= 10% replaced with 18%
20% replaced with 28%

Question 6

Negligible Value claims

Answer 6

E.g. Asset cost £10,000
Proceed. £5

£9,995 loss.

Can offset loss against capital gains. (Can be backdated up to 2 years also)

Question 7

Payment of CGT

Answer 7

Payable by 31st Jan

Unless (disposal of UK residential property) - POA within 60 days of completion.

Question 8

TRANSFERS AND CGT on death

Answer 8

Exempt- Only IHT payable if applicable and relevant

Question 9

Stamp duty land tax

Answer 9

Purchaser pays on residential/non residential (not seller)

Exempt for SDLT if divorce proceedings, outright gift, left in will.

Question 10

Stamp duty rates (given in exam table)

Answer 10

Use staggered approach to calc (Gross up figure to VAT inc)

Question 11

Inter-spouse transfers are tax neutral

Answer 11

Declaration of trust (automatically splits ownership and income to be split accordingly to suit tax needs of married couples)

Question 12

Wasting Chattels (Exempt)
Non-wasting chattels (Special rules)

Answer 12

Wasting chattels. (Boats, caravans, animals)
Non-Wasting chattels. (Antiques, jewellery, paintings)