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9 Cards in this Set
- Front
- Back
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How may capital losses be used by SOLE TRADERS? |
- CY - in full against gains - b/f - offset down to annual exemption - Trading losses can be dealt with as capital losses after s64 claim for same year. |
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How are capital disposals to connected persons treated? |
- Use MV as disposal proceeds (even if actual proceeds higher)
- losses ringfenced - against gains on disposal to same person NB transfers between spouses are on a nil gain nil loss basis |
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How may deferred consideration arise and how is it treated for CG? |
- payment in instalments - treat as single gain - contingent but known consideration - treat as instalments, if don't receive revise original gain - contingent but not known - the 'chose in action' is a separate asset, so treat as 2 separate gains. |
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What CG reliefs are available for companies, and what reliefs are available for individuals? |
companies - rollover relief only individuals - rollover relief, entrepreneurs relief, gift relief, incorporation relief, share for share exchange NB - PPR relief is not on syllabus for BPT |
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What is rollover relief? |
- when proceeds from sale of a captial asset are reinvested into qualifying capital for the business within the qualifying time period - CG tax charge can be deferred (partial relief applies if only part of proceeds are reinvested) |
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What is entrepreneurs relief? |
- CGT at 10% (rather than 18 / 28%) on disposals of qualifying assets (i.e. use annual allowance against other gains first) NB - lifetime limit of £10m, use up remaining basic rate band (if applicable) before other gains, MUST be claimed |
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What is gift relief? |
donor can defer CGT on gift (of QUALIFYING BUSINESS ASSETS) to the donee (so donee pays full CGT if they sell the gifted asset) NB - Sales at undervalue get partial gift relief. NB - gain eligible for gift relief when gift is shares in a personal company is restricted NB - must be claimed before entrepreneurs relief if both apply |
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What is incorporation relief? |
Essentially rollover relief for a sole trader, when they 'dispose of business assets in exchange for shares' on incorporation - can defer gain until the shares of the newly formed company are disposed of. NB - partial relief if part of the consideration is not shares (e.g. cash or debentures) NB - must be claimed before entrepreneurs relief |
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What is share for share relief? |
- applies when a person owns shares in a company, and exchanges those shares with another company for shares in the second company (so person owns company B becomes person owns company C which owns company B). gain deferred until new shares are sold as long as conditions met. partial deferral if mixed consideration given (e.g. shares and cash exchanged for shares - can tax cash straight away) NB also applies if QCBs received for shares NB - can disapply share for share relief if original disposal qualifies for ER and this would be more beneficial than deferring gain. |
