Chapter 12 - Capital gains tax

Question 1

What are the three columns for capital gains tax?

Answer 1

1) Qualifying for BAD relief
2) Other gains
3) Residential property

Question 2

What are ten examples of things that are exempt from capital gains tax?

Answer 2

1) wasting chattels
2) Foregin currency for private use
3) Animals
4) Decorations
5) Decorations for valour
6) Gilts
7) National Savings certificate
8) Cars
9) Premium bonds
10) Transfers on death
11) QCBs (corporate loan stock)

Question 3

What is the pro-forma for capital gains?

Answer 3

sales proceeds
(cost of aquisition)
————————-
XXX (capital gain)
————————-
(annual exempt amount)
———————————–
Taxable gain

Question 4

What order to you deduct annual exempt amount from capital gains from?

Answer 4

1) Gains on residential property
2) Gains not qualifying for business assets disposal (BAD relief)

Question 5

What is the formula to calculate allowable cost of a part disposal?

Answer 5

cost of asset * A / (a+b)

A= Gross proceeds of the part disposes
b= MV of the part retained

Question 6

How is an asset that has been destroyed or lost accounted for?

Answer 6

1) Treated as a sale with proceeds deemed to be the compensation received
2) Disposal date is the date the compensation is received
3) Gain can be rolled into the cost of a replacement asset if used within 12 months

Question 7

What is the CGT rule on death?

Answer 7

Market value at the date of the transferors death - however this is inheritance tax

Question 8

What is the chargeable gain?

Answer 8

Gain main before deducting annual exempt amount

Question 9

What is the taxable gain?

Answer 9

The chargeable gain after deducting the annual exempt amount