Chapter 11&12 Flashcards
What 2 types of chattels are exempt for capital gains tax
Wasting chattels (life <50 years), except plant and machinery used in business
Non wasting chattels bought and sold for <6000
What are the tax rates for capital gains tax
Below 37,700 is 10% or 18% for residential property
Above 37,700 is 20% or 28% for residential property
How is a disposal to a connected person treated
What happens to any losses
Disposal to connected person always at market value
Losses are ringfenced and can only be used against gains on disposals to the same person
What are the 3 rules for share matching for a disposal of shares
- Any acquisitions made on the same day as the date of disposal
- Any acquisitions made in the following 30 days
- Any shares in the S104 pool
How do you value shares that are gifted for capital gains tax
(Higher quoted price + lower quoted price)/2
When is capital gains tax usually paid
What about on gift of land or shares in a company you control
What about UK residential property
31st January after the tax year of disposal
Can be paid in 10 annual installments
Payable within 60 days of the disposal
How do you calculate private residence relief
Gain on disposal * periods of actual or deemed occupation/ total period of ownership
What are the 5 different categories you can qualify for deemed occupation for PRR relief
Last 9 months of ownership
Up to 3 years for any reason - must live in before and after
Up to 4 years absence while working elsewhere - must have lived in before and after
Any period employee is required to work overseas - must live in before and after
Up to 24 months whilst prevented from living in residence
Who can claim letting relief
Available to owner of a main residence in addition to private residence relief if part of property has been let out while owner living there
How do you work out letting relief
LOWER OF
- gain in let period for the part of the property that was let (gain*mths let/mths owned
- gain exempt under private residence relief
- £40,000
What is the only relief available to both individuals and companies relating to capital gains
How does it work
Rollover relief
Disposal of an old asset followed by acquisition of new asset used in trade
What happens if you reinvest money into a non depreciating asset for rollover relief
You deduct deferred gain from the base
What happens when you reinvest in a depreciating asset useful life <60 years
The gain is frozen and becomes chargeable on earliest of:
-10 years from date of purchase of replacement asset
- date replacement asset ceases to be used in trade
- disposal of new asset
What assets qualify for gift relief (2)
Chargeable assets used in business
Shares in a trading co (need minimum of 5% holding if quoted)
What type of assets do you ignore when calculating chargeable assets
What about chargeable business assets
Current assets
Current assets and shares and investments
