Introduction

Clients may be subject to capital gains tax when they dispose of certain assets. It is therefore vital for advisers when dealing with those assets to fully understand when capital gains may arise and how they will be taxed. The use of reliefs, exemptions and allowances can be a valuable planning tool which may allow clients to defer gains or minimise the tax they will pay on them.

This module is split into three sections and each section should take between 15 to 30 minutes to complete. Once you have completed all the sections there is a short self-assessment quiz to check what you have learned and a CPD certificate for up to 60 minutes can be claimed. Please read our guides below before attempting the self-assessment questions

Outcomes

On completion of this module you should be able to:

  1. Explain whe a capital gain may arise
  2. Demonstrate how tax is calculated on capital gains
  3. Determine when relief may be available to reduce or defer capital gains
  4. Describe the share matching rules

Learning materials

Post learning assessment

Question 1

On which of the following is there NO CGT payable?

  1. Joan sells her holiday home to her daughter Sarah for £150,000. The estate agent valued the property at £200,000
  2. Andrew switches his investment portfolio into joint names with his wife Faye
  3. Raymond gifts shares in his business to his daughter Nicole
  4. Tracy transfers her unit trust holding into a discretionary trust

Question 2

Linda sells a buy to let property which has never been her main residence. Linda is a higher rate taxpayer and has already used her annual CGT exemption on an earlier disposal. What rate of CGT will she pay following the sale of the property?

  1. 28%
  2. 20%
  3. 10%
  4. 0%

Question 3

Emily sold her business and realised a capital gain of £250,000. What can she do to defer the capital gain?

  1. Claim entrepreneurs relief
  2. Gift the proceeds into a discretionary trust and claim holdover relief
  3. Purchase shares to an amount equal to the gain in an Enterprise Investment Scheme (EIS)
  4. Purchase shares to an amount equal to the gain into an Venture Capital Trust (VCT)

Question 4

Adam holds units in a unit trust. His transaction history is as follows:

  • 1 May 2010 1,000 units purchased @ £1.00 per unit
  • 1 June 2016 500 units purchased @ £2.00 per units
  • 1 February 2019 200 units sold @ £2.50 per unit
  • 1 March 2019 100 units purchased @ £2.40 per unit

What will be the acquisition cost when calculating the capital gain on the shares Adam sold in February 2019?

  1. £2.50 per unit
  2. £2.40 per unit
  3. £2.00 per unit
  4. £1.33 per unit

Check your answers

Claim your certificate