| Question |
Answer |
| First line of a capital gains tax computations |
Proceeds |
| What might you substitute instead of money received for a capital gain if the transaction was not at "arms length" |
Market value |
| How many places do you generally round to in indexation calculations? |
3 decimal places |
| What can you deduct from sales proceeds in a CGT computation? |
Sales expenses |
| Indexation |
An allowance made by reference to RPI to allow for changing prices |
| When did indexation cease for CGT purposes? |
5 April 1998 |
| What took over from indexation from April 1998? |
Taper relief |
| What do you get if you owned an asset before 17 March 1998 with regards to taper relief? |
Bonus year |
| How do you calculate the number of years for taper relief? |
Number of WHOLE years you have held the asset since 5 April 1998 up to the date of sale |
| What is the formula for part disposal of assets? |
A/A+B where A is the proceeds received for the part sold and B is the market value of the remaining asset |
| What is the 5/3 rule? |
(blank) |
| When does the FA 1985 Pool start and finish? |
March 1982 and April 1998 |
| How many years absence are you allowed as deemed occupation for working abroad for PPR purposes? |
Any amount |
| How many years are you allowed as deemed occupation when working away from home for PPR purposes? |
4 years |
| What is the formula for calculating exempt amount for PPR? |
Period of occupation (as PPR)/Period of ownership |
| How many years at the end of ownership are you allowed as PPR whether or not you are living in the property? |
3 years |
| What is the rule when you make a loss and you have sold an asset for less than £6,000? |
Substitute £6,000 as proceeds |
| What is the date for payment of CGT? |
31 January following the end of the tax year |
| Can you include improvement expenditure in the cost of an asset? |
Yes, provided the improvement is still there at the time of sale. |
| What is the 5/3 rule? |
If asset sold for between £6,000 and £9,600 then calculate 5/3 (proceeds - 6,000) and take lower gain. |
| What can you deduct from sale proceeds in a CGT computation? |
Selling expenses, expenses of purchase, improvement expenditure, cost of asset and indexation (if relevant) |
| Indexation can create a loss. True or false? |
False |
| Indexation can make a loss bigger. True or false? |
False |
| What are the % for taxing capital gains |
10%, 20% and 40% |
| What is the annual exemption for 05/06? |
£8,500 |
| What is the correct order for taper relief, annual allowance and losses? |
Losses, taper, annual exemption |
| You must use current year losses against current year gains. True or false? |
True |
| You can skip brought forward losses forward a year if you choose to. True or false? |
True but only if you have used some of the losses against current year gains to bring the gains down to the annual exemption |
| Losses brought forward can be carried forward indefinitely. True or false |
True. If you are constantly making losses then these can be carried forward, but if you make a gain above the annual exemption then you must use the losses. |
| Gains on selling gilts are exempt from CGT. True or false? |
True |
Buen Viaje lv.2 ch 8
