CGT.pptVIP

Capital Gains Tax - computation Practise question 6 Edwina bought a chargeable asset in August 1999 for ￡240,000 paying acquisition costs of ￡12,000. In June 2002 she sold a one-quarter interest in the asset for ￡100,000, incurring disposal costs of ￡5,000. The remaining three-quarter interest in the asset was valued at ￡500,000 in June 2002. In January 2012 Edwina sold her remaining interest in the asset for ￡520,000. Calculate the assessable capital gain arising on each of the two disposals Practice question 7 Liam and Noel have the following gains and allowable losses for the years ended 5th April 2011 and 2012 Calculate the gains chargeable to CGT for each year and show the losses c/f at the end of 2011/12 2010/11 Liam Noel Gains ￡ 17,000 7,000 Losses (5,000) 10,000 2011/12 Gains 12,000 14,000 Losses (5,000) (3,000) INTRODUCTION TO CAPITAL GAINS TAX INTRODUCTION TO CAPITAL GAINS TAX Tax applies to gains on capital assets only Not trading profits Depends on the particular circumstances For example: if you buy a picture for ￡5,000 in 1985 and sell it 20 years later for ￡200,000 – the profit will be liable to CGT INTRODUCTION TO CAPITAL GAINS TAX For CGT legislation to apply you must have : A chargeable person A chargeable asset A chargeable disposal Otherwise no CGT liability INTRODUCTION TO CAPITAL GAINS TAX What is a chargeable person? Individual Trust Partnership Must be resident in UK A company pays Corporation Tax on Chargeable gains. INTRODUCTION TO CAPITAL GAINS TAX Who is exempt? Charities Pension Funds Non residents Unit trusts Transfers between spouses or SSCP’s are exempt INTRODUCTION TO CAPITAL GAINS TAX What is a chargeable asset? Anything that isn’t excluded! Excluded assets include Taxpayers principal private residence Betting and lottery winnings Foreign currency for personal use Gilts Motor vehicles including vintage National Saving Certificates, premium bonds etc Shares in an ISA Trading stock INTRODUCTION TO CAPITAL GAINS TAX What is