Chargeable Gains For Individuals

Question 1

Scope of capital gains tax
What is a chargeable:
disposal?
Asset?
Person?

Answer 1

Sale or gift of part of an asset

All capital assets unless exempt

Any individual - Uk resident (exceptions)

Question 2

What are the 10 most common exempt assets for capital gains tax?

Answer 2

Cash
Cars
Gilt edged securities/qualifying bonds
National savings certificates
Premium bonds
Prize and betting winnings
Assets held in ISAs
Wasting chattels (life < 50 years)
Non wasting chattels bought and sold for < 6k
Medals awarded for valour

Question 3

Gain on individual asset calculation?

Answer 3

Net proceeds:
Gross proceeds           X
Incidental costs          (X)
Net disposal:
Cost of acquisition     (X)
Incidental costs          (X)
Enhancement costs   (X)
Chargeable gain/loss X

Question 4

What is the annual exempt amount for capital gains tax?

Answer 4

£12,300

Question 5

What are the tax rates for capital gains tax?

Residential property?

Answer 5

Basic rate band 10%
Higher/additional 20%

Basic rate band 18%
Higher/additional 28%

Question 6

When is capital gains tax payable?

Any elections available to relieve payment burden?

Answer 6

31st Jan after end of tax year

Election to pay capital gains in 10 equal yearly instalments from normal due date if gift arose from:
Land/estate or interest in land
Shares out of controlling holding in quoted company
Any shares in unquoted company
Interest chargeable on balance

Question 7

Payment of capital gains tax on UK residential property

Payment date and submission?

Answer 7

Payment on account and submission of UK land return within 30 days of sales completion

Question 8

Payment of capital gains tax on UK residential property

When is no UK land return required?

Answer 8

The fain is covered by private residence relief
The disposal gives rise to a loss
The gain is covered by the annual exempt amount (AEA)

Question 9

Payment of capital gains tax on UK residential property

How do you calculate tax due?

Answer 9

Offset any prior year current year losses

Offset annual exempt amount

Estimate remaining basic rate band

Calculate POA to be paid in 30 days on this basis

Include gain in final CGT comp and deduct any payments on account (POA)

Question 10

What should be done to maximise tax relief in a complex capital gains tax question?

Answer 10

Offset Annual exempt amount against taxable residential property gains as you receive higher relief,

Using the basic rate band for residential property gain does not grant any additional tax relief overall

Question 11

Can any capital losses be restricted to fully utilise the annual exempt amount(AEA) ?

Answer 11

No, losses need to be fully deducted which could lead to a loss of the AEA

Question 12

What happens to a total capital loss in the year?

Is a capital loss carried forward used before or after the next years current year losses and AEA?

Answer 12

It is carried forward and offset against future chargeable gains

Used after current year losses and AEA and if these cover profits loss continues to carry forward