Tax

Question 1

Is capital gains paid by businesses

Answer 1

No - charable gain

Question 2

What is the basic capital gains calcualtion

Answer 2

Gain, less costs of purchase/disposal/sale
Less annual exemption 12,000
Pay 18% on difference between salary and 37,500, 28% on anything above that (property) - otherwise 10 and 20%

Question 3

What are the three main capital gains exemptions?

Answer 3

1. Entrepenurs relief - first 10m at 10% if disposal of business/whole/part, disposal of assets used for business within 3 years of it ceasing, disposal of shares in trading company/group trading company, 5% and 5% voting rights and officer/employee
2. Annual exemption 12,000
3. Spouse - value from time of purchase on her disposal

Question 4

How does roll over relief to CT work

Answer 4

1. Must invest in new between 1 before disposal and 3 years after
2. Defer if unincorporated business transfers to corporated

Question 5

Corporation tax- affected by capital expenditure eg land

Answer 5

No affecting corporation tax - may be a chargable gain on sale

Question 6

If a business spends money on expenditure on plant and machinery, can you set a certain amount off on trading profits

Answer 6

200k can be deducted - annual investment allowance for NEW
Other plant - so above 200k and old, 18% writing down allowance from income profits. Next year: 18% of the ‘pool’ gets written down
DOES NOT APPLY to integral feature of buildings - that’s only 8%

Question 7

Roll Over relied applies to what

Answer 7

A qualifying business asset
The acquisition cost of the new can be reduced by the gain on the first. You don’t pay tax on the gain on the disposal of the first. It defers tax.
Must be used in trade
If not immediately used, should be declared in the tax return that it will be used