Module 9 Capital Gains

Question 1

What are the main exempt assets to capital gains?

Answer 1

• Sterling currency
• Foreign currency for personal use
• War medals (unless purchased)
• Betting and lottery winnings
• Passenger vehicles (including vintage cars)
• Wasting chattels

Question 2

How much is the Annual Exempt Amount (AEA)?

Answer 2

£6000

Question 3

When does a chargeable gain need to be reported?

Answer 3

Within six months of the end of that tax year.

E.g by 5th October

Question 4

When does a chargeable gain on UK residential property need to be reported and paid?

Answer 4

Within 60 days of selling the property

Question 5

When is no reporting required?

Answer 5

1) Where an individuals total chargeable gains does not exceed £6000

AND

2) The proceeds received on the sale, or market value, do not exceed £50,000

Question 6

When does CGT need to be paid? (Except on residential property)

Answer 6

Due in one lump sum by 31 January

Question 7

How long is a short lease?

Answer 7

50 years or less to run

Question 8

How long is a long lease?

Answer 8

More than 50 years to run

Question 9

What is a chattel?

Answer 9

A tangible moveable object

Question 10

What is a wasting chattel and what are some examples?

Answer 10

Predicted useful life less than or equal to 50 yrs

Examples:
- Washing machines
- Computers
- Boats or caravans
- Plant and machinery

Question 11

What is a non-wasting chattel and what are some examples?

Answer 11

Predicted useful life greater or equal to 50 yrs

Examples:
- Antiques
- Jewellery
- Paintings
- Valuable postage stamps

Question 12

What are the identification rules (for shares)?

Answer 12

1) Shares acquired on the same day as disposed
then
2) Shares acquired within the following 30 days (earliest first)
then
3) Shares acquired before the date of sale (using pooling)

Question 13

What is a bonus issue?

Answer 13

Is the distribution of free shares to shareholders based on existing shareholdings

Question 14

What is a rights issue?

Answer 14

Involves shareholders paying for new shares, usually at a rate below market price and in proportion based on existing shareholdings

Question 15

What is private residence relief (PRR)?

Answer 15

Designed to exempt homeowners from paying CGT on any profit made when selling their primary residence

Question 16

How do you calculate PRR relief for periods of absence?

Answer 16

(period of occupation / period of ownership) x chargeable gain

Question 17

When does Gift relief need to be claimed and who needs to cliam?

Answer 17

4 Years from end of tax year of disposal e.g 5 April 2028 for gifts in 23/24

Claim must be made by BOTH donor and recipient

Question 18

What is Business Asset Disposal relief?

Answer 18

allows individuals to pay a reduced rate of Capital Gains Tax (CGT) when they sell or dispose of certain business assets

Question 19

How long must the taxpayer owned the business prior to disposal to use BADR

Answer 19

24 months

Question 20

What is the time limit for claiming BADR>

Answer 20

Must be made within 12months of 31 January

e.g if disposal took place in 23/24, the claim must be made by 31 Jan 2026