Nearly 1 million free-resource-downloads and-counting
Winner, Best Training Resources for Paraplanners 2019
Capital Gains Tax Reliefs

Capital Gains Tax Reliefs

There are various Capital Gains Tax reliefs available. These can be tested in any of the CII tax exams as well as in the financial planning written exams R06 and AF5.

THIS ARTICLE IS RELEVANT TO EXAMINABLE TAX YEAR 2018/19.

There are various reliefs available for when an owner sells or disposes of their business or if they are selling and replacing assets used in their business. Here is a table with the main facts of each:

Entrepreneurs’ Relief

Claimed when selling/disposing of a business

Whether in a partnership or a sole trader or where an individual holds at least 5% of the ordinary share capital in their trading company and can exercise at least 5% of the voting rights

First £10m of lifetime qualifying gains taxed at 10%

Must own assets for at least 1 year (2018/19)


Investors’ Relief

An extension of entrepreneurs’ relief

For external investors in unlisted trading companies

£10m limit /10% rate

Conditions:
Shares newly issued/
Issued post 16/3/16
Held for 3 years since 6/4/16
Holdover Relief

Used to hold over a gain on gift disposals

Applies to transfers chargeable to IHT and disposals of trading assets

CGT not paid at time of gift

Acquisition cost to donee reduced by held over gain/this increases gain on subsequent disposal

Not available for transfers into settlor interested trusts
Rollover Relief

Used when business assets are sold and proceeds used to buy new business assets

Relief defers gain until disposal of new assets

New assets must be bought between 1 year before and 3 years after disposal of old assets


Rollover Relief on Incorporation

Used where an unincorporated business is transferred to a ltd co in exchange for new shares

Relief defers the gain until shares are disposed of/gain is deducted from the issue price of the shares lowering base cost
Reinvestment into EIS

Defers CGT on disposal of any asset by investing in EIS shares

Gain deferred until disposal of EIS shares

Shares must be held for 3 years

No CGT on growth in the EIS shares

EIS shares must be bought up to 3 years after the disposal or 1 year before

SEIS Shares

Part exemption where gains are reinvested into SEIS shares

Not deferred/ 50% of reinvested capital gains are exempt

SEIS shares must qualify for income tax relief

Remaining 50% of reinvested gains are chargeable

Relief restricted to £100,000 of gains reinvested each year

 

Grab the resources you need!

If you’re studying for your CII R03 exam, and you don’t want to waste precious time figuring out the calculations, you’ll need to be well prepared. Grab our free taster to try out one of Brand Financial Training’s calculation workbooks for yourself.  Click the link to download the R03 calculation workbook taster now!

Click here to download our free calculation workbook taster for CII R03

Alternatively, you can download taster resources for AF1, AF2AF4AF5, J03R02 or R06 if you’re revising for any of those exams.