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Q3 CGT and IHT - Coggle Diagram
Q3 CGT and IHT
CGT
Business asset disposal relief (BADR)
(formerly entrepreneur's relief)
special 10% CGT rate for up to £1mil
Applied after other reliefs
- Qualifying assets: all/part of a business partnership
-all shs of your biz sold <3yrs post cessation
- shares in trading company - Eee owned+ 5%+ holding
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Chattels
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Purch for less than £6k, sale for more: restrict the gain to 5/3 x (gross proceeds - £6k)
Purch more than £6k, sold for less - loss reduced by setting gross proceeds at £6k
Connected persons
Spouse, direct relatives, business partners and their direct relatives, company controlled by any of these
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Gift relief
Deferral relief
Base cost of new owner reduced
- Qualifying disp: both UK res
- both agree election
- gift/sale at undervalue
- assets used in business/personal co75% holding - shares in trading co (>5% if quoted)
Overseas aspects
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Remittance: gains only taxed if remitted to UK
Lost AEA £12,300
Remittance basis charge (£30k/£60k)
Or, choose to be taxed on wroldwide income and then apply DTR for overseas income:
The lower of the UK tax and the overseas tax
Part disposal
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Valuing shares: may need to strip out
- non trade assets (random chattels, shares in any other co)
- all current assets (inv, TR, cash)
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Principle private residence relief (PPR)
Gain x (period of occ/period ownership) = exempt up to 100%
- Deemed occ:
- last 9mths
- 3 years any reason
- 4 years working elsewhere in the UK
- any time overseas work
-2 years prevention for any reason
Letting relief
Available in addn to PPR when the owner lets out part of the property
Lower of:
£40k, the exempt gain under PPR; gain in let period ignoring any exemptions
Rollover relief (ROR)
Gain = proceeds NOT reinvested
ROR is bal fig. This is deducted from base cost of asset at next sale
- Qualifying: any new asset for same business
- 12mths prior/36 mths after
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Shares and securities
Valuing for gifted shs:
MV @ date of gift
Higher + lower spot ave
Ignore marked bargains (these are not MV)
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Investors' relief (IR)
A lot like BADR, a special 10% CGT rate up to £10mil
- Qualifying assets: new shares;
- in an unlisted trading co;
held 3+ yrs
not Eee of co
Admin:
Normal due date: 31 Jan after TY
Gain on gift of land or shares in your company: 10 equal instalments starting 31 Jan as usual
Disposal of a UK residential property: 30 days
IHT
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Overseas aspects
Deemed domicile: election - applies to IHT only
If your spouse is/was UK dom.
Advantages:
- no upper limit on transfers between spouses
Disadvantages:
- Indiv's overseas assets are inlcuded in net assets for death tax comp
Deemed dom: 15/20 TYs, born in UK to dom of origin parents; 36mths after ceasing to be UK dom.
If UK dom worldwide assets are chargeable to IHT, if not, only UK assets.
Admin
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Death estate: payable by personal representatives, on delivery of the IHT account.
BTW, this is a deductible amount for your IT comp.
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