Capital Gains Tax Calculation

<p>A main residence used as a private home (C)</p> Signup and view all the answers

<p>No CGT is due on the transfer (D)</p> Signup and view all the answers

<p>Consideration minus allowable expenses (D)</p> Signup and view all the answers

<p>Personal chattels worth less than £6,000 (A)</p> Signup and view all the answers

<p>When the asset is sold for a lower price than acquired (C)</p> Signup and view all the answers

<p>BADR cannot be deducted when using hold-over relief. (B)</p> Signup and view all the answers

<p>20% (B)</p> Signup and view all the answers

<p>BADR (C)</p> Signup and view all the answers

<p>After income tax is applied to non-savings income. (B)</p> Signup and view all the answers

<p>Any current year capital losses. (D)</p> Signup and view all the answers

<p>Gains on disposals of residential property not covered by PRR. (C)</p> Signup and view all the answers

<p>It reduces any gain before applying CGT. (A)</p> Signup and view all the answers

<p>31 October 2025 (A)</p> Signup and view all the answers

<p>When their total gains qualify for BADR. (A)</p> Signup and view all the answers

<p>Income tax (C)</p> Signup and view all the answers

<p>It is deemed to be the asset’s market value on the date of disposal. (D)</p> Signup and view all the answers

<p>A spouse's sibling. (D)</p> Signup and view all the answers

<p>The donor is deemed to receive nothing in return for the gift. (C)</p> Signup and view all the answers

<p>The personal representatives acquire assets at the market value on the date of death. (A)</p> Signup and view all the answers

<p>Auctioneers fees and legal costs associated with disposal. (C)</p> Signup and view all the answers

<p>Legal fees paid for property maintenance. (D)</p> Signup and view all the answers

<p>The acquisition cost is ignored, and the market value on 31 March 1982 is used. (B)</p> Signup and view all the answers

<p>Was the asset a gift or purchased? (B)</p> Signup and view all the answers

<p>They must be declared even if no gains exist. (A)</p> Signup and view all the answers

<p>They can reduce taxes on any gains until fully relieved. (A)</p> Signup and view all the answers

<p>£32,500 (B)</p> Signup and view all the answers

<p>It influences whether disposals are considered at arms-length. (B)</p> Signup and view all the answers

<p>They take over the assets at market value without tax implications. (B)</p> Signup and view all the answers

<p>To defer capital gains tax liability until a later date (A)</p> Signup and view all the answers

<p>Shares in an unlisted trading company (A)</p> Signup and view all the answers

<p>5% (C)</p> Signup and view all the answers

<p>The shares were held for less than two years before disposal (A)</p> Signup and view all the answers

<p>Gains up to the first £1 million of qualifying lifetime gains (C)</p> Signup and view all the answers

<p>The individual disposes of at least 5% of their business interest simultaneously (D)</p> Signup and view all the answers

<p>To defer capital gains tax from the disposal of any asset (D)</p> Signup and view all the answers

<p>The individual must be beneficially entitled to 5% of profits (A)</p> Signup and view all the answers

<p>£3,000 (D)</p> Signup and view all the answers

<p>By 31 January following the tax year of disposal (A)</p> Signup and view all the answers

<p>Transfer of investment property (C)</p> Signup and view all the answers

<p>A trading company’s unlisted shares (C)</p> Signup and view all the answers

<p>It is carried over to the transferee’s base cost for future disposals (B)</p> Signup and view all the answers

<p>£10 million (C)</p> Signup and view all the answers

<p>They can be carried forward to offset future gains. (B)</p> Signup and view all the answers

<p>£3,000 (C)</p> Signup and view all the answers

<p>The gain is calculated by taking the difference between selling price and original acquisition cost. (C)</p> Signup and view all the answers

<p>They are disallowed and cannot be claimed. (C)</p> Signup and view all the answers

<p>If the proceeds are used to buy a similar asset. (C)</p> Signup and view all the answers

<p>The whole proceeds from the original asset must be used for the new asset. (D)</p> Signup and view all the answers

<p>A principal private residence. (A)</p> Signup and view all the answers

<p>£3,000 (B)</p> Signup and view all the answers

<p>The sale price is deemed to be £6,000. (B)</p> Signup and view all the answers

<p>The losses must not be used to offset any current year gains. (A)</p> Signup and view all the answers

<p>The amount left in the basic rate band after taxable income has been taxed. (B)</p> Signup and view all the answers

<p>The sale price is deemed to be £6,000. (D)</p> Signup and view all the answers

<p>It limits chargeable gains that can be taxed in any year. (D)</p> Signup and view all the answers

The tax payable on any gain realised from selling a chargeable asset. It's only applicable to a profit, you don't pay CGT on a loss.

The gain realized from the sale or disposal of a chargeable asset, calculated as the difference between the disposal proceeds and the original cost (allowable expenditure).

The loss realized from the sale or disposal of a chargeable asset, calculated as the difference between the original cost (allowable expenditure) and the disposal proceeds.

A person who is subject to capital gains tax. This includes individuals, trustees, personal representatives, and partners.

The act of selling, giving away, or losing a chargeable asset, triggering CGT calculations.

Assets subject to CGT calculations. They include most assets except for specifically exempt ones like personal residences, personal chattels under a certain value, and wasting assets with a lifespan below 50 years.

The transfer of an asset between married or civil partners living together. This transfer is tax-free, meaning no CGT is payable on the transaction.

The amount received from the sale or disposal of a chargeable asset. This figure will be used to calculate the capital gain or loss.

A disposal of an asset where the price is not determined through fair negotiation, often happening between connected individuals.

Individuals related by blood, marriage, or civil partnership, including spouses, siblings, parents, children, and grandchildren.

The price a willing buyer would pay for an asset in an open market.

A transfer of ownership of an asset without receiving any payment. The donor is deemed to receive the asset's market value at the time of the gift for Capital Gains Tax purposes.

The cost of acquiring an asset, including any incidental costs incurred during the purchase.

The market value of an asset on 31st March 1982. This is used for assets owned on that date instead of the actual acquisition cost when calculating capital gains.

Costs incurred directly related to purchasing an asset, such as legal fees, auctioneer fees, or stamp duty.

Expenditure incurred after the purchase of an asset that increases its value and is still reflected in the asset's state at disposal.

Costs incurred directly related to selling an asset, such as legal fees, estate agent fees, or valuation costs.

Losses arising in the current tax year that can be offset against chargeable gains in the same year, even if this means losing the annual exemption.

Losses that cannot be used in the current year due to insufficient chargeable gains. These can be carried forward to future tax years and offset against future gains.

The amount of capital gains allowed to be made without paying tax.

The process of applying losses against gains to reduce the overall amount of Capital Gains Tax payable.

A loss incurred on the sale of an asset that can be used to offset future capital gains in the same or subsequent tax years.

An asset with a life expectancy of 50 years or less. Examples include household appliances like washing machines.

An asset with a life expectancy of more than 50 years. They are generally exempt from CGT if sold for £6,000 or less.

The amount of money received from the sale of a chargeable asset. It will be used to calculate a gain or loss.

The process of selling an asset and realising a profit or loss.

A type of relief that allows you to defer paying capital gains tax when you sell a qualifying business asset and reinvest the proceeds in a replacement asset.

This relief allows you to offset any losses made on the disposal of an asset against the tax payable on future gains arising on the disposal of other assets.

The amount of income that is taxed at the basic rate (this is the lower rate of income tax).

To sell an asset, whether for a profit or a loss, triggering a capital gains tax calculation.

A tangible asset that can be physically moved, such as a painting or jewelry.

The process of selling a property and realising a profit or loss.

The main property used as a person's home. Gains on the sale of a PPR are generally exempt from CGT.

A qualifying asset for hold-over relief, including shares in an unlisted trading company or the transferor's personal company (with at least 5% voting rights), an interest in an unincorporated business, or a business asset used by the transferor or their personal company (with at least 5% voting rights).

A tax relief scheme that allows individuals to defer capital gains tax when they invest in shares of a private limited company, provided specific conditions are met.

A tax relief designed to help entrepreneurs when they sell their business, allowing them to reduce their capital gains tax liability.

One of the qualifying disposals for BADR, involving shares or securities in a trading company (or the holding company of a trading group), provided the individual meets specific criteria like ownership percentage and employment.

Another qualifying disposal for BADR, encompassing the transfer of the whole or part of a business carried out by an individual (sole trader or partner) that has been owned for at least two years.

A qualifying disposal under BADR involving assets used for business purposes at the time the business ceased operations, requiring a minimum ownership period and business closure within a specific timeframe.

Covers the disposal of personal assets lent to a business by a partner or shareholder, subject to ownership conditions and disposal of a portion of the partnership or shares in the company.

The maximum amount of qualifying gains eligible for BADR, set at £1 million. This lifetime limit applies across all qualifying disposals.

The reduced CGT rate applicable to qualifying disposals under BADR, set at 10%, benefiting entrepreneurs selling their businesses.

The time frame within which an individual must claim BADR relief after the disposal year, ending on the first anniversary of 31 January following the relevant tax year.

The process of aggregating qualifying gains under BADR with other taxable income received in the same tax year, which may potentially use up the basic rate band.

The period in which shares of a trading company must satisfy the conditions for BADR eligibility, spanning the two years leading up to the disposal date.

The percentage of distributable profits and assets that an individual must beneficially own in a company for qualifying BADR relief, set at 5%.

The requirement for an individual to be a full or part-time officer or employee of the company for BADR relief to apply on the disposal of shares.

Capital Gains Tax (CGT) is the tax on the profit made from selling an asset like shares or property. You only pay CGT if you make a profit, not if you lose money.

A chargeable disposal is any action that triggers the calculation of CGT, such as selling a chargeable asset or giving it away as a gift.

A chargeable asset is any asset that is subject to CGT. This includes most assets, except for specifically exempt items like your primary residence and personal belongings.

Rollover relief lets you postpone paying CGT when you replace a qualifying asset with a similar one. This can be useful for businesses that are growing and upgrading their assets.

Hold-over relief postpones CGT payment when you gift a business asset to someone else, like a family member or business partner.

BADR (Business Asset Disposal Relief) can reduce the CGT rate to 10% on certain asset sales, making it a valuable tool for entrepreneurs selling their business.

The annual exemption is the amount of capital gains you can make each year without paying CGT. For the 2024/25 tax year, the annual exemption is £12,300.

Capital gains are taxed at different rates depending on your total income and the type of asset sold. The rates are 10%, 18%, 20%, 24% and 28% in 2024/25.

You must report your chargeable disposals as part of your self-assessment tax return. You can file your tax return online or on paper. The deadlines for submitting returns are 31 January for online or 31 October for paper returns.

CGT is generally payable on or before 31 January following the end of the tax year, which means you'll typically need to pay your capital gains tax bill by 31 January of the following year.