Topic 3 Capital Gains Tax Flashcards
The main principal types of asset disposal are?
- Sale of an asset (whole or part)
- Gift of an asset (whole or part)
- Distruction of an asset (whole or part)
- Sale of right or money receive to forfeit right
What are these in relation Capital Gains Tax (CGT)?
- Capital sum received as compensation for damage to assets
- Capital sum received under as compensation insurance policy for damage or injury to assets
- Capital sum from surrender of insurance policy
- Beneficiary of a trust becomes absolutely entitled to settled property against the benefits
Other types of disposal of an asset
Disposal of an asset is treated as when?
Money changes hands or Contract becomes legally binding
Contract becomes legally binding
What is “Deferred Consideration”?
When the payment of an asset is not completed at the point of sale
Where the value of an asset’s point of sale is know this is called what?
Deferred consideration taxable at point of sale
What is “Unascertainable Contingency payment”
When the value of an asset to be purchased is not know
Example of Unascertainable Contingency payments are what for CGT purposes?
- Market value of asset
- Another liability for CGT if assets is more than market value
- Can be treated as a loss for the year of the original disposal of asset (i.e part 1 2024, part 2 2025)
An example of an exemption for CGT is what?
When assets are transferred upon death
What is a “no gain/no loss” transfer?
A non chargeable gain made up of disposal from one spouse to another during a tax year
If a couple no longer live together how long do they have to take advantage of the “no gain/no loss” rule
3 years
The below are examples of what?
- Private motor vehicles
- Personal belongings below £6,000
- Gifts to the nation of national, historic or scientific interest
- Foreign currency for personal expenditure
- British Government Stocks (Gilts)
Exemption for CGT
The below are examples of what?
- British government stocks (gilts)
- NS&I Savings certificates & Save As You Earn Schems
- Shares in venture capital trusts
- Woodlands
- Pension funds
Exemptions from GCT
If a person have one than 1 house within how many years must an election for the personal residence be made?
Within 2 years
A person with long term care needs can claim how long grace from CGT if they no longer live in their main residence?
36 months
How is CGT calculated?
- Determine disposal proceeds
- Deduct cost of purchasing the asset
- Deduct costs of arranging purchase
- Deduct any losses
- Deduct AEA
CGT is calculated on an individual’s income tax band
True or False?
True
What is not taken into consideration when calculating CGT?
Personal income tax allowance
These are what is relation to CGT?
- If asset is sold on commercial basis then same price is used
- If an asset is gifted then the market value at the time should be used
- If sold to a connected person the market value should be used
- Costs of selling the assets can be deducted from the sale price
How the CGT from an assess disposal is calculated
An asset purchase before 31st March 1982 are not tax when working out the cost of the gain what figure is used?
Asset value at purchase date?
Asset value on 31st March 1982?
Asset value on 31st March 1982
Reinvestment Relief is available to assets traded using what?
Enterprise Investment Scheme (EIS)
Enterprise Investment Scheme can qualify for tax relief at what percentage?
30%
What is the maximum period a reinvestment must be made according to the EIS to qualify for reinvestment relief?
Up to 3 years
To qualify for Business Asset Disposal Relief what is the minimum period assets must be owned?
2 years
Business Asset Disposal Relief gains for the first £1 million are charged at what percentage?
10%
The lifetime limit for Investors relief is what?
£10 Million
What date does GST need to be paid in the following tax year?
31st January
When UK land & property is sold when must CGT be paid?
Within 60 days of the sale of the property
