The Capital Gains Tax Chapter Flashcards
Exempt Assets from chargeable Gains Tax
Cars
Cash
GT edged securities and qualifying corporate bonds
National savings certificates and premium bonds.
Assets held in New Individual Savings Accounts
Wasting chattels
Asset 1
Asset 2
Chargeable Gains
Annual Exempt AmountTaxable Gain.
AEA.11100.
Gross Proceeds!!!
Gross Proceeds
LessIncidental costs of disposal
Net disposal consideration Less: Allowable expenditure Cost of acquisition Incidental costs of acquisition Enhancement expenditure
Chargeable Gain/Loss
General Rule the disposal consideration is the proceeds received for the asset.
Exception use market value when-
The sale was not made at arms length eg a gift…
Deduct incidental costs of disposal. Examples include auctioneers fees estate agent fees and legal costs.
Allowable expenses!!!
Deduct the acquisition cost of the asset-
Purchase price of bought
Market value if gifted
Probate value if inherited
Enhancement expenditure- new extensions, architects fees.Incidental costs of acquisition eg legal fees, surveyors fees.
Part Disposals
Where only part of an asset is disposed of the acquisition cost
Cost *A/(A+B)
A-Market balue when disposed
B-Marker value of part retained
Q’s
Beth makes the following gains and losses
Asset 1-Gain of 2000
Asset-Loss of 6500
Asset3-Gain of 12500
The Gains-2000+-6500+12500-8000
The brought forward
The capital loss brought forward.
Must be offset against first available future gains.
Must preserve the annual exemptions.The net gain is made equal to the annual exemption (11100).
…
S64…ofsetting!!!!!!!!
Offset trading losses with the gains!!!
This is possible in the tax or the Prior!!!
To determine the trading loss which is allowed is
Loss remaining from the trading
The Gains.
Capital Gains Tax Payable For Individuals and Trustees
Rates of CGT for individuals
Basic Rate Bands-18
Excess of Basic Rate Bands-28
Rates if CGT for trustess
Rate of tax for trustess
In a bare trust the assets are treated as belonging to the beneficiary personally so any gain/loss on disposal is treated in the beneficiary as normal rather then the trustees.
Payments of CGT in instalments
CGT could be paid in instalments-if arising out of gift
- land
- shares in a company-controlling holding
- share in unquoted company
CGT Instalments
Payable election 10 instalments annually
Interest normally chargeable on outstanding balance…
Husband and wife(civil partners) are taxable as separate individuals
Both entitled to separate annual exemption-naughty!!!
Transfers between married couples/civil partners
When assets are transferred between two spouses no gain or loss arises.
The transferor is deemed to dispose of the asset at its acquisition costs…
These rules only apply when the spousesliving together not seperated.
