Chargeable Gains Essay

4052 WordsMar 20, 201217 Pages
RELEVANT TO ACCA QUALIFICATION PAPER F6 (UK) AND PERFORMANCE OBJECTIVES 19 AND 20 Chargeable gains, part 1 This two-part article is relevant to candidates sitting the Paper F6 (UK) exam in 2012, and is based on tax legislation as it applies to the tax year 2011–12 (Finance Act 2011). Question three of Paper F6 (UK) focuses on chargeable gains in either a personal or a corporate context, and is worth 15 marks. A small element of chargeable gains may also be included in any of the other questions. PERSONAL CHARGEABLE GAINS Scope of capital gains tax (CGT) CGT is charged when there is a chargeable disposal of a chargeable asset by a chargeable person. A chargeable disposal includes part disposals and the gift of assets. However, the transfer of an asset upon death is an exempt disposal. A person who inherits an asset takes it over at its value at the time of death. All forms of property are chargeable assets unless exempted. The most important exempt assets as far as Paper F6 (UK) is concerned are: • certain chattels (see later) • motor cars • UK Government securities (gilts) In determining whether or not an individual is chargeable to CGT it is necessary to consider their residence status. EXAMPLE 1 Explain when a person will be treated as resident or ordinarily resident in the UK for a particular tax year and state how a person’s residence status establishes whether or not they are liable to CGT. • A person will be resident in the UK during a tax year if they are present in the UK for 183 days or more. • A person will also be treated as resident if they make substantial visits to the UK, with visits averaging 91 days or more over four consecutive tax years. • Ordinary residence is not precisely defined, but a person will normally be ordinarily resident in the UK if this is where they habitually reside. • A person is liable to CGT on the disposal of assets

More about Chargeable Gains Essay

Open Document