Chapter 17 - Introduction to capital gains tax

Question 1

When might a capital gains tax CGT liability arise?

Answer 1

When a chargeable person makes a chargeable disposal of a chargeable asset

Question 2

The following are not chargeable persons for CGT purposes: 2

Answer 2

1. Companies and other corporate bodies, which pay corporation tax on their capital gains (not CGT) and so cannot normally incur a CGT liability
2. various other organisations such as charities, community sports clubs, local authorities health etc

Question 3

Assets exempt from CGT: 14

Answer 3

1. A taxpayers principal private residence
2. motor cars, including vintage and veteran cars
3. chattels disposed of for £6,000 or less
4. Chattels with predictable useful life of 50 years or less
5. gilt edges securities
6. National saving certs and premium bonds

Question 4

As well as the sale of a shareable assets, the following are also chargeable disposals: 4

Answer 4

1. the sale of part of a chargeable asset
2. the gift of all or part of a chargeable asset
3. the loss of destruction of a chargeable asset
4. the receipt of a capital sum derived from a chargeable asset (compensation from insurance on damage)

Question 5

Relief for capital losses c/f impact on annual exception?

Answer 5

Losses c/f are offset against first future gains only to the extent they exceed the basic exception.

Question 6

CGT Administration

Answer 6

Taxpayers are not required to fill in the CGT section of the tax return if:
total disposal proceeds in the year do not exceed four times the amount of the annual exemption (£45,200 for 2017-18), and
total gains for the year do not exceed the annual exemption (£11,300 for 2017-18)
CGT is payable on 31 January following the end of the tax year (POAs are not required)
If disposal proceeds are received in instalments, the taxpayer may make a claim to pay the related CGT in instalments