Read each question carefully and select the answer you think is correct (do your working to determine this as necessary). Once you have made your selection check if this is correct.
Which of the following statements is FALSE?
Capital gains tax was first introduced in 1965 to tax transactions which were not subject to income tax.
Capital gains tax produces a substantial proportion of the government’s total taxation revenue.
Between 1982 and 1998, for individual taxpayers, relief was given for the effects of inflation in the form of an indexation allowance.
The taper relief system that replaced indexation in 1998 was introduced to make the system simpler.
Which of the following is NOT exempt from capital gains tax?
Approved superannuation funds.
Approved scientific research associations.
Local authorities.
Charities using gains for charitable purposes.
Personal representatives of deceased estates.
Which of the following assets is NOT exempt from capital gains tax?
Motor vehicles.
Foreign currency used for private purposes.
Decorations for valour purchased by the chargeable person and then re-sold.
Damages for personal or professional injury.
Betting winnings.
Allowable costs which are taken into account in computing a capital gain or loss do NOT include:
The initial purchase price of the asset.
Legal fees incurred on acquisition of the asset.
Capital expenditure in defending the title to the asset.
Cost of repairs and maintenance to the asset during the period of ownership, if these are deductible for income tax purposes.
Capital expenditure in enhancing the asset (still reflected in the state of the asset at the time of disposal).
Ted Bloss has income of £4,000 and makes a non-residential property capital gain of £20,000 in the tax year. The capital gains tax payable for that year is:
£770.00
£1,143
£1,386
£1,540
£2,000
Wasting chattels are tangible movable property with an estimated useful life of 50 years or less. Wasting chattels are always exempt from capital gains tax.
True
False
Prafula Fernandez purchased a Louis IV chair at a car boot sale for private purposes in June 2003 for £1,000. She sold the chair in October 2021 at auction for £7,000, after paying auctioneer’s commission of 10%. What was the capital gain?
£2,963
£6,778
£6,000
£nil
The gain arising on the sale of an individual’s main principal private residence is exempt from capital gains tax. Which of the following statements about the exemption are correct? 1. The exemption also covers grounds of up to half a hectare. 2. Any period of absence of up to three years, is deemed to be a period of occupation, provided the individual has no other exempt residence at the time and actually occupied the property before and after the absence. 3. The rule relating to only one main residence is relaxed for individuals living in job related accommodation.