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Capital Gains Tax Q&A
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Detailed Capital Gains Tax Questions
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Latest Qn's
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First time buyer relief for SDLT? - USERNAME: akassociates1
Tax Question: My wife & I assisted our eldest son in the purchase of his first property. The purchase pricein 2006 was £250k. My son got mortgage of about £170 k and the balance about £80k was contributed by parents as gift. My son is now selling the property to my younger son i.e. his brother at £250k. Market value is about £320k. Can my younger son avoid paying stamp duty? . . .
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Can I use March 1982 value to calculate capital gain? - USERNAME: Amji
Tax Question: A dentist client of mine purchased goodwill in £1976 for £20000 and sold it in June 2010 for £120,000 . Can I bring in March 1982 valuation which he estimates to be £50,000 in my calculation .Or March 1982 valuation is no longer applicable now.As My software is not accepting March 1982 valuation. I have to submit these tax returns on Monday and Your quick response will be much appreciated. . . .
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Offset of capital loss on disposal to company against other capital gains - USERNAME: Cashbuyer
Tax Question: I own a small parcel of land which I had hoped to develop by purchasing a piece of land from an adjoining property. This has not proved to be possible and the land is now worth substantially less than the purchase price. I want to get the land off my own personal balance sheet by using a company I own to purchase it from me. This will result in a Capital Loss which I intend to offset against other gains. I intend to pay for a RICS valuation to determine the sale price. Are there any tax rules which will prevent me from offsetting the loss against other gains because I own the company which is making the purchase? If there are any rules, would it make any difference if I transfer the shares in the company into my wife's ownership before it purchases the land? Many thanks. . . .
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CGT and granting lease extensions - USERNAME: Fellows
Tax Question: My sister-in-law, let's call her "A", is negotiating to buy a freehold ground rent investment. This will be her only property investment, so she cannot be held to be a trader. There are 30 apartments, each paying £300 per annum in ground rent. The leases have 84 years left to run, expiring in 2096. As you may know, such leases lose value as they approach and pass the 80 years mark, as lease term extensions then become more expensive, and mortgages more difficult to find. She plans to offer 90 years extensions to the leaseholders, but not the full set of rights that the leaseholders could claim, rather, offering them a simpler deal based on ease and cheapness of fees. The price of these extensions will be around £8,000 for each one. She wishes to "slice and dice" the leases by granting a "head leasehold" on five of the apartments to one of her sons, in other words he will have the right to hold the apartment, from 2096 to 2186, thus expiring 90 years after the existing lease does. These will then be gifted to the son. When the leaseholder of one of the five apartments wishes to buy a 90-year extension he will be buying it from the son, not the freeholder, A. All the above can be achieved, contractually and legally, and will be well received by the leaseholders. My questions are: 1) Is the gift to her son a taxable event? Yes, I understand that it will fall into her estate if she does not survive for 7 years, but leaving that to one side, does the gift give rise to a Capital gains Tax charge or an income tax charge when she gives it to the son? 2) When the son sells one of these apartment lease extensions, will it be a Capital Gain, but at £8,000 come in under the limit? Or would it be classed as income, and liable to Income Tax? (N.B. The son is 16 and unlikely to have any income of any kind until he graduates University in 5 or 6 years time, so his annual income tax personal allowance will be available to offset the any income tax.) 3) If it is a Capital Gain would he need to report it to the HMRC, or, since it is below the threshold, say nothing? 4) How many times could she gift a group of apartments to her children, or other close relatives, before it becomes a "scheme" and attacked by HMRC as such? . . .
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Adjusting sale proceeds for CGT purposes -
USERNAME: Amji
Tax Question: Hello A year ago a client of mine sold a post office for £150,000 with a verbal assuarance to the buyer (who is a family friend of his) that if there is a disposal within two years and if the friend sells it for less than £150,000 my client will refund the diffrence to the friend. (friend is not a connected person for CGT purposes and there was no market value obtained two years ago.) Now the friend is selling the busines and can only get £80,000 for the busines. My client honouring the assurance given is giving back £70000 (£150,000 less £80000)and I am completing 2010-11 tax returns for the client. I want to show the disposal proceed to be £80,000 rather than £150,000 as my client is returning £70,000 to the friend .£25000 al;ready paid and rest to be paid in istalment . Am I ok to do this please? . . .
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CGT on disposal of shop premises - USERNAME: inquirer
Tax Question: How can I calculate the value of a shop premises owned in 1982 and let out --so I can work out the capital gain to be paid in 2012? would the 1982 value be calculated on the rent paid at the time (and if so how would it be calculated?) -- -or would I have to ask a local surveyor to estimate the value etc? Also are there any ways of mitigating the capital gain due ? thank you . . .
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Best way for non dom to acquire foreign shares - USERNAME: Ng
Tax Question: If a UK Resident but Non Dom person is invited to subscribe for founder shares into a USA Business and later also acquires additional shares at a pre set price what is the best way to acquire these shares? Issue is that if the USA company is sucessful then it is likely that the potential gains from the shares will be very substantial. . . .
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Tax on transfer of shares between spouses - USERNAME: Enquirer
Tax Question: Hello All the shares of a private limited company is owned by a private individual. The company hasn't made any profit to date but will start making some profit soon. This individual would like to transfer half the shares to his wife before the company starts making profit (so that later, both husband and wife can take out dividends). Is there any capital gains or any other taxes associated with this transfer between spouses? What is the formal procedure for transferring shares of a private limited company? do they have to be valued externally in any way etc.? Thanks . . .
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CGT base cost of shares after becoming UK resident - USERNAME: wiseowl
Tax Question: CGT on shares prior to becoming UK resident. Please could you advise on the following. Non resident individual for many years comes back to UK. Has portfolio of shares which have been purchased many years ago and thus showing good profits. When sold after becoming resident what value is taken as the purchase price. A.The initial purchase cost or B.The value at the date of becoming resident or C.Any other valuation ? Thank you. . . .
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CGT deduction for share custody fees? - USERNAME: Accounting
Tax Question: I have been charged custody fees by my stock broker (fees charged for having my shares held by that stock broker, which are different from the commissions paid at the moment of buying/selling the shares). My question is: what is the treatment of these custody fees? Can I use them against any gains? If so, in which way? Where should I report them in my tax return? Thanks very much for your explanation. . . .
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Questions on foreign capital loss election -
USERNAME: Accounting
Tax Question: I am UK resident and not domiciled in the UK. In the year 2008/2009, I had foreign capital losses, and I chose to declare using the arising basis of taxation, and I declared my foreign capital losses in the "capital gains summary" section of my tax return. 0) Can I use these losses against future capital gains? In the year 2009/2010, I had foreign capital gains, which were never sent to the UK, and I chose to declare using the remittance basis of taxation, and I didn't make an election for my foreign losses to be allowable. Now, in the year 2010/2011, I have foreign capital losses. If I choose to declare using the arising basis of taxation: 1) Should I declare my foreign capital losses in the "capital gains summary" of my return? 2) What is the treatment for this foreign capital losses of 2010/2011, specifically: 2.1) Can I use them against the foreign capital gains of the same year 2010/2011? 2.2) Can I use them against future foreign capital gains if in those future years I choose to pay on the arising basis? As a final general question: if my intention is to generate substantial foreign capital gains that will never be sent to the UK, is it in my advantage not to make an election for my foreign losses to be allowable? Thanks very much for your explanations. . . .
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CGT exemption for UK shares sold by non resident -
USERNAME: Gem
Tax Question: Your online CGT non resident tool asks the following question; Were the assets sold used for the purposes of your UK business (carried out via a UK permanent establishment? When selling a UK based Ltd company which owns and lets a commercial warehouse to a third party tenant - is the answer to the CGT tools question Yes or No? Many Thanks . . .
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Questions on moving overseas to avoid CGT - USERNAME: Gem
Tax Question: Further to my last question concerning my non trading company: I have a couple of queries relating to your suggestion that I could move abroad and sell the company and not be liable to CGT. If I did this would I not be liable for CGT in the country that I was resident in? or does this depend on which country I live in? Would I have to be outside of the EU? Would I be allowed to retain the proceeds of the sell in a UK bank account? As a non resident would I still need to complete a UK tax return and be subject to tax on any UK generated income? Many Thanks . . .
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