Tax for PLP

Question 1

When is CGT payable?

Answer 1

When there is a chargeable disposal, of a chargeable asset, by a chargeable person, which gives rise to a chargeable gain

Question 2

Chargeable disposals

Answer 2

• sale of an asset
• lifetime gift of an asset

A gift on death is not a chargeable disposal

Question 3

Chargeable asset

Answer 3

All property assets (land) are chargeable assets
- except the main home where and insofar as it qualifies for Private Residence Relief

Question 4

Private residence relief conditions

Answer 4

• A person does not pay CGT if they sell or dispose of their home

Provided these conditions are met:
- main home for all the time they lived in it
- has not been used for business purposes
- has not been let out
- grounds including all buildings are less than 5,000 square metres

If any of these conditions are not met, PRR may be refused or not available

Married couples can only treat one property as main home

Question 5

Capital losses and annual exemption

Answer 5

• if taxpayer has made losses on asset during the tax year, they can offset these against gains made
• Annual exemption of £3000

Question 6

What is the position regarding CGT for a land which comprises an area of 1 hectare (10,000 square metres)

• over statutory limit

Answer 6

One half of the gain will be exempt because it relates to the area of land within the statutory limit (5,000m); the remainder will not be exempt

• provided the other conditions are met

Question 7

Is private residence exemption available for a buy-to-let property?

Answer 7

No - there will be CGT payable as the exemption does not apply to a buy-to-let property which has not been used by the seller as their residence

Question 8

What is deemed date of disposal for CGT purposes for a commercial transaction?

Answer 8

The date of exchange of contracts

Question 9

What are SDLT rates on residential transactions?

Answer 9

• up to £250,000 = no SDLT payable
• over £250,000 - £925,000 = SDLT of 5%
• Over £925k - £1.5m = SDLT of 10%
• Over £1.5m - SDLT of 12%

Question 10

SDLT rates on residential transactions first time buyers

Answer 10

A discount is applicable provided the purchase price is no more than £625,000

• No SDLT for first £425k and 5% on remaining

If more than one is purchasing the property, they must all be first time buyers
- If not - first-time buyer’s relief is not available

Question 11

Purchase of a second home - residential transactions

Answer 11

Additional SDLT 3% is charged on whole of the purchase price

Question 12

SDLT on non-residential transactions

Answer 12

• Up to £150k = no SDLT
• £150k - £250k = 2%
• Over £250k = 5%