Chargeable gains (CGT)

Question 1

Define chargeable disposal. (4)

Answer 1

Sale
gift of asset excluding to charity
bequest on death
all assets transferred between spouse

Question 2

List some exempt assets. (8)

Answer 2

• Cash
• Cars
• Qualifying bonds
• NSC
• Prizes and betting’s winnings
• ISA
• Wasting chattel
• Non-wasting chattel bought and sold for under £6000

Question 3

What does allowable expenditure include? What is AEA in CGT computation?

Answer 3

• Acquisition cost
• Incidental acquisition costs (legal fees)
• Enhancement expenditure (extension/architecture fee)

Annual Exempt Amount; currently £3000

Question 4

What are the tax rates for HTP/ATP and BTP?

Answer 4

• HTP/ATP: 20%
• Residential property: 24%
• BTP: 10%
• Residential property: 18%

Question 5

When is CGT payable?

Answer 5

By 31 Jan end of tax year except for property

Question 6

What is the order of deductions for CGT?

Answer 6

• Current year capital loss
• AEA
• Capital losses brought forward

Question 7

What is the rule for asset transfers between spouses? Who is considered a connected person?

Answer 7

No capital gain is recognised (NGNL - no gain/loss); proceeds are ignored and disposal is acquisition cost.

• Relative
• In-laws
• Spouse relatives and partners
• Business partners and their spouses

Question 8

How is acquisition cost apportioned in a part disposal?

Answer 8

Cost x A/(A+B) where A = Disposed part MV and B = Retained part MV

Question 9

What are the matching rules for disposal of shares? What is the order?

Answer 9

Sell shares bought in the same company first in this order:

Shares acquired same day as disposal, shares acquired 30 days after (FIFO), shares bought prior to disposal date including bonus and rights (S104 pool)

Question 10

Formula for quoted shares when gifted

Answer 10

Lower quoted price + (higher quoted price - lower quoted price)/2