Ch17 - Gains Computation and CGT Flashcards
Chargeable disposals
Sale or gift of the whole or part of an asset
Exchange of an asset
Loss of destruction of an asset
Receipts of a capital sum from an asset e.g. compensation for damage, receipt for surrender of rights
Exempt Disposals
Disposals in result of a death of an individual
Trading disposals?
Gifts to charities
Chargeable assets
Freehold land and buildings
Goodwill
Unquoted shares
Quotes shares
Certain Chattels (furniture, P&M) (CH18)
Exempt assets
Motor vehicles (inc vintage cars)
Main residence
Cash
Certain type of chattels (CH18)
ISA Investments
Qualifying corporate bonds
Gilt-edged securities (TREASURIES)
NS&I certificates
Foreign currency for private use
Receivables
Trading inventory
Prizes and betting winnings (PREMIUM BOND)
Gifts from residents not in UK
Proforma: Capital Gain/Loss
Disposal/Sale Proceeds
Less: Selling costs (auctioneer/estate agent fees)
= Net disposal proceeds
Less:
Allowable expenditure:
Cost of acquisition, capital expenditure, costs to preserve title,
= Chargeable gain/allowable loss
If goods proceeds are not made at arms length
If a gift or connected party (parent, sibling, child), MV is used for actual gross proceeds received
Or the cost of acquisition???????
Profroma: CGT 23/24
Net chargeable gains for the annual
Less: Allowable losses
Less: AEA (£6k given)
Less: Capital losses b/f
====Taxable gains
CGT Liability: Taxable gains*tax rate 19/25%
Less: POA re residential property disposals
CGT Payable
If net chargeable are gains are lower than $6k
Covered by the allowance so zero
Bringing forward capital losses and losing AEA
Capital losses cannot be restricted against the gain to avoid wasting the AEA.
If Capital losses exceed the chargeable gains AEA is wasted
Capital losses can be b/f
Rates of CGT tax
If taxable income: (post PA reduction)
Basic rate band: 10%, 18% res property
excess of basic rate band: 20%, 28% res property
Notes for computation: Tips
Take the AEA of residential property as it’s on higher tax
Split into 2 columns
Find taxable income e.g. given in question minus PA.
Extend the band and minus taxable income to get unused basic rate to multiply by 10% - NOTE TAXABLE INCOME WILL INCLUDE THE PA REDUCTION.
The balance will be at 20%
CGT Planning Opportunites
IF AEA already used in 1 year, delay disposal of an asset to following year to save £6k
Delay disposal if taxable income is lower in the second year
Disposing later in the year post 05 April 2024, so CGT payable 31st Jan 2026
Sell shares in tranches to go across multiple tax years