ACCA Tax UK

A= gross consideration of part sold

B = MV of remainder

Cost x A/(A+B)

a private residence is exempt, if:

• it was occupied by the owner throughout the full ownership
• it was occupied by the owner at some point and periods of non-occupation are seen as "deemed occupation" periods

! Only 1 PRR per couple

PRR = Gain x period of occupation / period of ownership

• last 9 month of ownership
• any period where taxpayer was employed abroad
• <=4 years work away from home
• <= 3 years for any reason

• destruction of asset without compensation = loss
• destruction of asset with compensation = gain

1. no reinvestment of proceeds = 100% gain = 100% CGT chargeable
2. 100% reinvested = gain can be rolled over = deferred until the later disposal of the replacement asset
3. part reinvested = some of the gain is chargeable now, the balance can be rolled over

it is only a disposal if compensation is received.

Allowable cost = cost x A / (A+B)

A = compensation received, B = market value of damaged asset

quoted and unquoted shares

shares must be of the same class (ordinary/preference) in the same company but can have been acquired at different times.

shares of same class & same company

1. all shares acquired on same day (as disposal) = one single transaction
2. shares acquired in NEXT 30 days ->FIFO
3. shares held in pool (average cost is deducted) -> all remaining shares

new shares issued at 0 cost, in proportion to their existing holding

-> the size of the original holding is increased but the pool cost is NOT

new shares that are issued at a discount

= shares are exchanged for shares

1. no gain/loss disposal of old shares - the new shares simply assume the cost of the old shares
2. when the new shares are later on sold, any gain/loss is calculated with the deemed cost of the old shares

simple takeover = 1 class of shares

A owns 2000 company shares at a cost of 5000

the company is taken over and offers A 1 shares for 2 already held. now he has 1000 company shares at a cost of 5000

the cost of the old shares must be aportioned. the basis is the market value

• no gain/loss in relation to exchange of shares
• immediate part disposal for cash consideration

calculation of cost as usual

when the assessment of a gain on the sale of a qualifying business asset is deferred becauste the sale proceeds are suitably reinvested

• Goodwill
• moveable plant & machinery

• both assets must be qualifying
• both assets must be used in the trade of the company
• reinvestment period: 12m before and 3 years after disposal
• claim: within 4 year after tax year end in which the claim arises or asset is acquired

chargeable gain = lower of

1. gain
2. proceeds not reinvested

the balance to the gain is rolled over

modified rollover relief

• the rolled over gain is NOT deducted from cost of the new asset but delayed until the earliest oft
  • 10th annivesary
  • disposal of new asset
  • when the new asset ceases to be used

depreciating qualifying asset = wasting assets = FIXED plant & machinery

a gain on a gift is deferred until the gift is disposed of

• gift must be done by an individual
• the qualifying asset must be used in trade by the transferor's/transferees trading company
• shares/securities in UNQOTED trading company (from anyone)
• shares/securities in transferors OWN (>5%) company can be quoted/unquoted
• claim must be done by BOTH

ANY part of a gain NOT attributable to the trading use of an asset, is ineligible for relief and must be assessed immediately.

sale @ undervalue  = sale for less than MV

1. the Market value is used to calculate the chargeable gain before the relief is considered
2. if the actual consideration > cost - the actual gain is taxed emediately and Relief for delta is available

a personal taxpayer can benefit from a preferential tax rate on disposals of their whole business or significant part of business.

10% is applied to the NET GAINS (Gains-losses) for up to 1m. this is a LIFETIME limit

1. disposal of whole or part of unincorporated business owned by taxpayer for 2 years before disposal
   1. NO relief for gain on INnvestment assets
2. disposal of shares is material if:
   1. it is a personal trading company of taxpayer <5% AND
   2. taxpayer was employee/director of company
   3. it is a trading company
   4. 2 years of ownership before disposal
      1. relief applies to WHOLE vlaue of shares, even investment assets
3. Disposal of assets withi 3 years after cessation of trading of a business whwere taxpayer is owner
   1. no relief for investment assets

1. 12 Months
2. rest

1. companies are assessed on profits for ACCOUNTING PERIOD, invidiuals on income in TAX YEAR
2. NO personal allowance for companies
3. NO annual exempt amount for companies
4. Indexation allowance ONLY for companies
5. chargeable gains for companies are taxed under corporation tax

• Add normal dividends to TTP for AUGMENTED PROFITS (not 51% group div.)
• dividends are paid out of net profit (after tax), dividends are therefore a distribution of taxed profits.dividends received (corporate shareholders) are therefore exempt from tax

Trading profit

property business profit

non-trade interest

miscellaneous income

Chargeable gains

= total profit

(Qualifying charitable donations)

= TTP

1. for associated companies
2. for short acc. periods

Augmented profits = TTP + dividends received (NOT 51% group dividends, these are ignored)

26.5%

this represents the tax for profits falling between the profit limits