Reliefs

Question 1

Who gets rollover relief?

Answer 1

• individuals

- companies

Question 2

What assets qualify for RR?

Answer 2

• fixed P+M
• goodwill (individuals only)
• L+B used for trade

Question 3

What are the time frames for RR?

Answer 3

Proceeds have to be used within 1 year before sale to 3 years after sale

Question 4

How does RR work?

Answer 4

Proceeds: 100k
Cost (50k)
Gain: 50k
ROR: 50k

New asset:
Cost: 200k
ROR: (50k)
Base cost: 150k

Question 5

How does partial ROR work?

Answer 5

Whatever is not reinvested is chargeable

Question 6

Do you get ROR on portions of private use?

Answer 6

No, just business use elements

Question 7

Who is entitled to gift relief (GR)?

Answer 7

Only individuals

Question 8

What assets qualify for GR?

Answer 8

• shares in personal trading co (will be told)
• need to have >5% of voting rights
• unquoted trading shares
• assets of a sole trader or personal co
• only on CBA (L+B and P+M) not CA (L+B, P+M and investments)

Question 9

How does GR work?

Answer 9

• gift a qualifying asset, then use the MV at the gift as the proceeds
• any gains are deductible from the cost of the person receiving the gift (also the MV)

Question 10

What if it is not an outright gift for GR?

Answer 10

• still use proceeds as MV
• less the cost
• actual gain is as if the proceeds were what you actually received
• the difference of the two gains is the GR
• GR is deductible from the cost (MV) to the recipient

Question 11

Who is entitled to entrepreneur’s relief (ER)?

Answer 11

Individuals

Question 12

What assets qualify for ER?

Answer 12

• shares in personal trading co, >5% voting rights and have been an employee for 12 months prior
• sole trader business
• assets of sole trader business within 3 years of ceasing to trade

Question 13

How does ER work?

Answer 13

10% tax

• use up BRB furst
• apply AEA - residential first, non-ER gain and then ER gain
• 10m lifetime limit

Question 14

Who is entitled to investors relief (IR)?

Answer 14

Individuals

Question 15

What assets qualify for IR?

Answer 15

• unlisted traded shares held for 3 years

Question 16

Who is entitled to PPR relief?

Answer 16

Individuals

Question 17

What assets does PPR apply to?

Answer 17

• residential homes

Question 18

How do you calculate the gain on the asset for PPR?

Answer 18

1) calculate gain normally
2) total period of ownership in months
3) no of months they have actually lived and deemed to be a resident (months)
4) PPR = gain x actual+deemed/total ownership

Question 19

What is deemed occupation for PPR?

Answer 19

• last 18 months
• 3 years of absence for any reason as long as it is sandwiched between actual ownership
• any period if working abroad, sandwiched with actual resident
• 4 years of absence for working elsewhere in UK, sandwiched

Question 20

Who is entitled to letting relief (LR)?

Answer 20

Individuals

Question 21

When does LR apply?

Answer 21

• when the owner is absent from PPR and lets out home

Question 22

What is the amount of LR?

Answer 22

Lower of:

• 40k
• PPR given
• gain relating to letting period after PPR

Question 23

Who is entitled to SSE?

Answer 23

Companies

Question 24

When does SSE apply?

Answer 24

• disposals of shares in another trading company

- need to have held 10% for the last 12 out of 24 months

Question 25

How is SSE applied?

Answer 25

• gain and loss is exempt