Capital Gains Tax 2016/17
Capital Gains Tax
|Individuals and deceased estates
- Each individual is entitled to an annual exemption, but that exemption may be denied if he claims the remittance basis (see Personal Taxation).
- The annual exemption cannot be transferred or carried forward or back to another tax year.
|Individual – to limit of basic rate band
|Individual – above basic rate band
|Trusts and deceased estates
- CGT is payable on capital gains made in the tax year, after deduction of capital losses, available reliefs and the annual exemption.
- In 2016/17, receipts of carried interest by venture capital investors are taxed at the same rates as residential property.
- When a chargeable asset is given away, the donor is treated as receiving the full market value and is liable for CGT accordingly.
- There is no charge on disposals between spouses or registered civil partners who are living together. On such disposals, the transferee takes over the transferor’s CGT cost.
- There is no CGT on gains accrued to the date of a taxpayer’s death. Instead, the value of the estate may be subject to Inheritance Tax
Entrepreneurs’ Relief (ER)
|CGT on qualifying disposals
- Disposals made by individual or certain trustees can qualify for ER.
- The asset disposed of must have been owned for at least a year and be one of:
- a business or an interest in a business
- business assets sold within three years of the business ceasing
- shares in a trading company of which the individual is an officer or employee and holds at least 5% of the ordinary share capital, or acquired the shares under an EMI scheme
- assets used by the shareholder’s personal company or partnership and sold at around the same time as 5% or more of the company’s shares or partnership interest
Other CGT reliefs
|Taxpayer’s only or main home
|Gain is exempt for the periods the taxpayer lives there, or is deemed to live there, plus the last 18 months of ownership.
|Chattels (tangible movable property)
|If bought and sold for less than £6,000.
|Gifts to charity
|Not charged to CGT, and gifts of quoted shares and land also enjoy an income tax relief.
|Assets which become of negligible value
|Deemed to be sold at nil, to create loss, when an election is made.