Capital Gains Tax

what happens to gains if any of the individual's income is charged to income tax at the higher rate

gains which do not qualify for ER will be taxed at 20%.

what is allowable expenditure?

1) Acquisition cost or market value if acquired from a connected person 2) Incidental costs of acquisition, e.g. legal fees, stamp duty 3) Enhancement expenditure, not allowed as repairs, maintenance or insurance (i.e. improvement expenditure).

what are gains that qualify for ER taxed at?

10%

when does a charge to CGT arise?

A CHARGE TO CGT ARISES WHEN THERE IS: · A CHARGEABLE DISPOSAL OF · A CHARGEABLE ASSET BY · A CHARGEABLE PERSON

what is a person's CGT liability for a tax year based on?

A person's CGT liability for a tax year is based on all the chargeable disposals made by that person during the tax year, i.e. 6.4.19-5.4.20.

what is CGT?

As regards a gift, CGT is basically a tax on the increase in value of an asset, even if the taxpayer gives the asset away and receives nothing in return.

what are chargeable persons for charities?

Charities are not a chargeable person

what happens to disposals between a husband and wife?

Disposals between husband and wife who live together during the year are chargeable disposals, but the actual proceeds are substituted for a value which results in no gain or loss being made. Buy asset £100 sell it for £130 because it a spouse you set the proceeds at sp 100 so no gain and spouse owns that asset at the cost of 100

what are chargeable persons for a company?

For companies, the gains are included in their corporation tax computation, i.e. they pay corporation tax on gains, not capital gains tax (CGT).

what are chargeable persons for partnerships?

For partnerships - individual partners are chargeable, not the partnership. Any gains must be split between them.

what happens if a loss arises on a transaction?

If a loss arises on a transaction then it must be first set off against gains arising in the same fiscal year, even if this means wasting the annual exemption.

what is indexation allowance?

Indexation allowance was introduced in 1982 to take account of the effects of inflation. It is there to ensure that any part of the gain which has been solely caused by the effects of inflation are not charged to tax.

what are chargeable persons for an individual?

Individuals pay capital gains tax on their gains

what are non chargeable disposals?

Non-chargeable disposals include gifts to charities, art galleries and museums. Also disposals caused by the death of the taxpayer.

what is the date of the chargeable disposal?

The date of a chargeable disposal is the date on which ownership of the asset changes hands, regardless of the date on which any payment takes place.

what chargeable disposal is not a chargeable gain?

The sale of an asset during the course of a trade (i.e. Stock/inventory) gives rise to a trading profit (income tax) not a chargeable gain.

what is the annual exemption?

There is an annual exemption of £12,000.

when will the transaction that is deemed as the disposal value be used as the market value?

between connected persons or not at arm's length (e.g. a gift)

what do you do if losses exceed gains in any fiscal year?

carry forward the balance of losses and offset against net gains in future fiscal years.

what is the disposal value?

money received as consideration.

what is an individual connected with?

Þ Spouse Þ Relatives ( brothers, sisters, ancestors, and lineal descendants) Þ Relatives of spouse Þ Spouses of spouse's relatives