Module 10: Other Relieds from Chargeable Gains

Question 1

PPR relief

Answer 1

(Period of occupation / period of ownership)

X

Gain

Question 2

CGT EIS reinvestment relief

Answer 2

Defers the chargeable gain on the sale of ANY asset where a qualifying investment (into EIS shares) is made within a qualifying time frame

Question 3

For CGT EIS reinvestment relief to be fully available

Answer 3

The whole chargeable gain must be reinvested

Question 4

Subscribes to shares

Answer 4

Buying brand new shares that have never been issued before

Question 5

Depreciating asset

Answer 5

Life of less than or equal to 60 years

Question 6

Gains qualifying for ER taxed at

Answer 6

Preferential 10% rate regardless of level of taxable income

Question 7

Mix of gains, some ER and some non-qualifying

Answer 7

Often taxed at 28/20% rather than 18/10% as BR band is usually exhausted

Question 8

AEA allocated in priory to

Answer 8

Non ER gains to save max amount of tax

Question 9

Disposal of sold trade business - Land and buildings

Answer 9

ER

Question 10

Disposal of a sold trade business - goodwill

Answer 10

ER

Question 11

Disposal of a sold trade business - plant and machinery

Answer 11

Cars exempt

Question 12

Disposal of a sold trade business - plant and machinery sold at loss

Answer 12

No capital loss allowed as capital allowances claimed

Question 13

Disposal of a sold trade business - other net assets

Answer 13

Exempt

Question 14

Amount which cannot be deferred =

Answer 14

Lower of
Net sale proceeds not reinvested

Chargeable gain on sale of first asset

Question 15

If rollover relief

Answer 15

Reduce base cost of asset 2

Question 16

If holdover relief

Answer 16

Record gain and wait until triggered

Question 17

Gift relief claim

Answer 17

Gain deferred by reducing base cost of asset by gain amount

Question 18

Gains on investment assets - gift relief

Answer 18

Do not qualify

Question 19

Partial gift/ part sale - chargeable gain w

Answer 19

Part of gain remains chargeable

Amount chargeable = excess of actual cash proceeds less cost for GCT

Question 20

Election of gift relief

Answer 20

Joint election by donor and donee

Question 21

Relief of gift of shares in personal company

Answer 21

Total gain x CBA / CA

CBA = market value of chargeable business assets

CA = market value of chargeable assets

Common one is investments - CA but not CBA

Question 22

Gift relief vs entrepreneur’s relief

Answer 22

Gift relief takes precedence

Question 23

Incorporation relief - gain deferred

Answer 23

Value of share consideration/
Value of total consideration

X

Total gains

Question 24

Conditions for incorporation relief (3)

Answer 24

• business must be transferred as a going concern
• all the assets of the business must be transferred
• business must be exchanged wholly or partly for shares

Question 25

Incorporation relief claim

Answer 25

Automatic

Question 26

Entrepreneur’s relief on gains arising in goodwill on incorporation of close company

Answer 26

Not available

Question 27

Letting relief only available when

Answer 27

House has already qualified for PPR

Question 28

Letting relief =

Answer 28

Lowest of:

• £40,000
• gain covered by PPR relief
• gain attributed to period let

Question 29

Gain covered by let period =

Answer 29

Let period (months) - deemed occupation / total months

X

Gain

Question 30

Qualifying reinvestment CGT EIS (3)

Answer 30

• Individual subscribes to ordinary shares
• in qualifying EIS company
• for cash