IHT & CGT

Question 1

Criteria for Entrepreneur’s Relief (6)

Answer 1

1 - Must be selling the shares and not assets
2 - Must be a trading company
3 - Must own at least 5% of the shares
4 - Owned shares for more than 12 months
5 - Must have been employed or director for over 12 months
6 - Gains must be within lifetime amount - £10m

Question 2

Substantial Shareholding Exemption

Answer 2

No chargeable gain arises where a trading group sells shares in trading company in which it has owned at least 10% of shares for continuous period of 12m beginning no more than 6 years before the sale

Question 3

Stamp Duty

Answer 3

0.5% of the sale proceeds

Question 4

Share exchange or loan stock advantages

Answer 4

CGT rolled over
Can use AEA to reduce gain

But lose ability to claim ERelief and lose control of company/may not have control of new shareholding company

Question 5

BPR for unincorporated business and AIM Shares?

Answer 5

100%

Question 6

BPR for controlling shareholdings in fully listed companies, land, buildings and plant and machinery

Answer 6

50%

Question 7

Agricultural Prop Relief

Answer 7

This relief is for land, buildings and growing crops, but not machinery and animals

• Relief is given at 100% for owner occupied farms and farm tenancies
• Relief is given at 50% for the interest of landlords in let farmland

Question 8

CGT Pre-1982 Assets

Answer 8

Rebased as at 31st March 1982

Question 9

Companies and CGT

Answer 9

1) Indexation can apply
2) No AEA
3) No CGT but CT instead

Question 10

Incorporation Relief

Answer 10

• Assets of unincorporated business are exchanged for shares in the incorporated business (Ltd Co.)
• All assets of the unincorporated bus. must be transferred in exchange for shares
• The deferral is achieved by deducting the capital sum arising on disposal of the assets
  From the from the value of the shares received from the limited company
  Incorporation relief is automatic and does not have to be applied for

Question 11

Holdover relief

Answer 11

No CGT payable at the time of transfer
Donee acquires asset at donor’s base cost
Both need to apply

Question 12

Business rollover relief

Answer 12

Is available when selling a business asset and buying another business asset
 The business must be trading
 The asset sold must have been used in the business
 The new asset must be for use in the business
 The new asset must be bought within 1 year before the disposal and 3 years after disposal
 The relief defers the gain until the disposal of the new asset