M4 - Capital Gains Taxation Flashcards

1
Q

What are the two exemptions to a chargeable disposal?

A
  • asset transferred due to death
  • gifts of assets to charities
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2
Q

three criteria of a chargeable gain?

A
  1. Chargeable disposal (asset is no longer owned)
  2. Chargeable asset
  3. Chargeable person (business or individual)
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3
Q

What is an Indexation Allowance?

A

Adjusts gain on sale of asset to account for time value of money. Uses RPI. Stopped after Dec 2017

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4
Q

Rule for transferring asset to spouse or civil partner?

A

no chargeable gain or loss

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5
Q

What happens if indexation causes a loss to increase?

A

It is ignored.

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6
Q

What happens if indexation turns a gain into a loss?

A

Gain becomes nil. Never a loss figure due to indexation

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7
Q

Steps for calculating total chargeable gains in tax return

A
  1. calculate gain or loss for each individual disposal
  2. Add chargeable gains together, remembering that any losses are now nil
  3. offset gain with any brought forward loss from prior CAPS
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8
Q

Matching and pooling shares for individuals three steps?

A
  1. same day acquisitions
  2. Acquisitions in the next 30 days
  3. The share pool using AVCO method (all shares owned before the date of sale)
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9
Q

what is a 1 for 2 bonus issue?

A

A company rewards shareholders with a free share for every two shares they already own

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10
Q

Matching and pooling shares for companies three steps?

A
  1. same day acquisitions
  2. Acquisitions in the last 9 days
  3. The share pool using AVCO method (all shares owned before the date of sale)
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11
Q

when is the indexation allowance allowed up until?

A

December 2017

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12
Q

What is Rollover Relief?

A

A form of relief which defers the date tax is payable in the future on the chargeable gain when a replacement asset is purchased with the proceeds

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13
Q

What are the three types of rollover relief?

A
  • Normal rollover relief
  • Rollover relief given in insurance situations
  • Holdover relief
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14
Q

What is holdover relief?

A

The same as rollover relief except for assets which depreciate (have a life of less than 60 years)

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15
Q

What determines how much relief is obtained in holdover and rollover relief claims?

A

The proceeds and how much was reinvested into the same asset class

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16
Q

When is holdover relief made chargeable again?

A

The earliest of:
- Date of sale of newly bought asset
- Cessation of use in trade
- 10 year anniversary from purchase

17
Q

What happens to any rollover relief amount during the disposal of the next asset that included the reinvested funds?

A

It increases the chargeable gain through reducing the cost figure

18
Q

What happens if the next asset’s value is less than the original asset where the rollover relief was gained?

A

The difference would become payable in chargeable gains tax immediately. any value left over would be eligible for rollover relief

19
Q
A