Matt - Capital taxation - Level 1 Flashcards
What is the principal legislation behind Inheritance Tax?
Inheritance Tax Act 1984
Where can the definition of market value be found within the Inheritance Tax Act 1984?
Section 160
What is Inheritance Tax?
A tax on the estate of someone who’s died.
What is the principal legislation behind Capital Gains Tax?
The Taxation of Chargeable Gains Act 1992
Where can the definition of market value be found within the Taxation of Chargeable Gains Act 1992?
Section 272
What is Capital Gains Tax?
A tax on the profit when disposing of an asset
What is the principal legislation behind Stamp Duty Land Tax?
Finance Act 2003
Where can the definition of market value be found within the Finance Act 2003?
Section 118
What is Stamp Duty Land Tax?
A tax when purchasing building and land
What is UK VPGA 15?
It is a section of the U.K. National Supplement to the Red Book which covers capital taxation so IHT, CGT, SDLT and ATED.
Can you name some reliefs for Inheritance Tax?
- Agricultural relief
- Charitable relief
- Business property relief
- Fall in value relief
- Quick succession relief
Can you name some exemptions for Inheritance Tax?
- Annual exemption up to £3,000 per annum for gifts
- Donating to charity
- Donating to political parties
Can you name some reliefs for Capital Gains Tax?
- Principal private residence relief - no CGT for your main home and up to 0.5 hectares
- Rollover relief
Can you name some exemptions for capital gains tax?
- Your car
- Items with a value below £3,000
- Lottery winnings
- Shares in an ISA/PEP
What is the difference between the definition of market value as contained within VPS 4 of the Red Book and that contained within UK VPGA 15?
The definition of market value is similar, however the key difference is that in the text, it does not assume that the market value will be reduced from the market being flooded.
What are the thresholds for Stamp Duty Land Tax?
For residential properties it is:
- Up to £250,000 (0% rate)
- £250,001 to £925,000 (5% rate)
- £925,001 to £1,500,000 (10% rate)
- Anything above £1,500,000 (12% rate)
What are some reliefs for Stamp Duty Land Tax?
- First time buyers
- Multiple dwellings
- Building companies buying an individuals home
- Local authorities making compulsory purchases
- Right to buy properties
What are some exemptions for Stamp Duty Land Tax?
- Property is left to you in a will
- No money or other payment changes hands for a land or property transfer
- Property is transferred because of a divorce or dissolution of a civil partnership
What is Annual Tax on Enveloped Dwellings?
It is a tax paid on corporations that have a portfolio of residential properties with a value over £500,000.
It was brought in to plug a hole of SDLT avoidance, and bring more of these properties back in to residential owner hands rather than corporations.
What is the current IHT threshold?
£325,000
What are the tax rates for Inheritance Tax?
40%
36% if more than 10% of estate is left to charity
What are the tax rates for Capital Gains Tax?
This depends on whether you’re a basic rate taxpayer or higher rate taxpayer.
If you’re a basic rate taxpayer then it’s 10% or 18% for residential.
If you’re a higher rate taxpayer then it’s 20% or 24% for residential.
What are the different thresholds for inheritance tax?
- £325,000 (Basic threshold)
- £500,000 by leaving your home to direct descendants like children or grandchildren (using £175,000 residence nil rate band)
- £650,000 if inheriting your spouse/ partners threshold
- £1,000,000 if inheriting your spouse/partners threshold and residence nil rate band
