Unit 1 Topic 4 Flashcards
Which one of the following is normally exempt from capital gains tax on
disposal?
A A holiday home
B Shares in UK companies
C A unit trust
D An antique table worth £5,000
D An antique table worth £5,000
Which one of the following statements in respect of capital gains tax (CGT) is correct?
A Chargeable assets held within and outside the UK may be subject to
CGT on disposal.
B Premium Bond and Lottery winnings are subject to CGT because they are classed as unearned income.
C The annual exemption allowance may be carried forward to be used in a later tax year.
D CGT may be payable on a deceased’s estate in addition to inheritance
tax.
A Chargeable assets held within and outside the UK may be subject to
CGT on disposal.
Suzy bought an antique Chinese vase in 1985 and recently sold it at an
auction at a profit. Which one of the following will she NOT be able to
offset against any liability to capital gains tax’?
A The cost of acquiring the vase in 1985
B The cost of a repair to a hairline crack
C Advertising costs
D The auctioneer’s commission for the sale
B The cost of a repair to a hairline crack
Matthew recently sold some unit trusts and made a taxable gain of £6,700.
His taxable income for this tax year is £20,000. How much capital gains
tax is he required to pay?
A £1,840
B £1,340
C £670
D Nil
C £670
Which one of the following transactions could be subject to capital gains tax?
A An antique bought by an individual for £20,000 and sold for a profit
B A painting bought by a self-employed dealer for £20,000 and sold for a profit
C An insurance bond bought for £20,000 and surrendered by the original investor at a profit
D Government stocks bought for £20,000 and sold at a profit
A An antique bought by an individual for £20,000 and sold for a profit
Which one of the following disposals may incur a liability to capital gains tax at the time of disposal?
A A UK resident selling his holiday home in Spain for a profit
B Transfers between spouses who are living together
C Disposals to recognised charities
D The deemed disposal of assets on an individual’s death
A A UK resident selling his holiday home in Spain for a profit
What exactly are ‘allowable deductions’ in the calculation of capital gains tax liability?
A Government fixed allowances against capital gains tax liability
B The annual exemption limit only
C Costs incurred in acquiring, enhancing and disposing of an asset
D The annual exemption limit and the indexation allowance
C Costs incurred in acquiring, enhancing and disposing of an asset
What is the position when a capital loss is made on disposal of an asset?
A It is not relevant to capital gains tax calculations
B It must be carried forward to the next tax year to offset against future capital gains
C It can be offset initially against gains made in the year the loss occurred
D It should be carried back to the previous year
C It can be offset initially against gains made in the year the loss occurred
A capital gains tax liability could arise in which of the following circumstances?
A A corporation sells some of its investments
B A partnership’s daily trading
C A public limited company’s daily trading
D Disposal of assets upon the retirement of a sole trader
D Disposal of assets upon the retirement of a sole trader
Which of the following assets would be exempt from capital gains tax
A A piece of personal jewellery valued at £20,000
B A Spanish property used for holiday visits
C Euros held for use on foreign holidays
D Shares purchased on the UK stock market
C Euros held for use on foreign holidays
In May 2017 Peter made a gift of £500,000 to his son Paul. Peter died in June 2020 leaving an estate of £750,000. Which IHT rate is applicable to at least part of the £500,000 gift?
A 0%
B 24%
C 32%
D 40%
C 32%
Julian died in May leaving an estate valued at £350,000. Having made NO gifts or transfers previously he now left half his estate to his son and half to his wife. What was the inheritance tax liability?
A Nil
B £43,200
C £30,000
D £140,000
A Nil
On which one of the following would inheritance tax be charged at 40%?
A The total value of the deceased’s estate
B The amount of the chargeable estate above the threshold
C The full value of the estate after an individual domiciled in the UK dies
intestate
D The value of the estate that remains after the proportion due to the
deceased’s spouse has been deducted
B The amount of the chargeable estate above the threshold
A potentially exempt transfer is best described as:
A a small gift not exceeding £250, made during an individual’s lifetime.
B a transfer with deferred inheritance liability provided it is made more than 7 years before death.
C any transfer of any amount between spouses.
D a transfer that bears no immediate charge to inheritance tax irrespective
of the amount of transfer
D a transfer that bears no immediate charge to inheritance tax irrespective
of the amount of transfer
When is the tax due to be paid following a ‘chargeable lifetime transfer’?
A Immediately
B After 6 years
C After 7 years
D Following the death of the donor
A Immediately
