And there's more: if you have disposed of assets in the 2000/2001 tax year, including a property, shares or a business, you may have to pay capital gains tax (CGT). The deadline for the payment of capital gains tax is November 1st and tax is payable at 20 per cent.
The first £1,000 (€1,270) capital gains made in a tax year by each individual is exempt from CGT, and this is not transferrable between spouses. Any unused exemptions in one tax year cannot be carried forward.
The gain is calculated by deducting the costs of acquiring the asset from the sale proceeds (less costs of disposal).
Take Mr JP, for example, who sold shares on April 30th, 2000, for £10,000. He bought these shares two years previously on March 31st, 1998, for £7,500. Mr JP's CGT liability for 2000/2001 is calculated as follows:
Proceeds (less selling expenses): £10,000.
Less purchase cost (indexed)*: £7,942.50.
Taxable gain: £2,057.50.
Less personal allowance: £1,000.
Gain chargeable to CGT: £1,057.50:
Tax @ 20 per cent: £211.50.
*Costs may be indexed (to provide for inflation) if the asset is held for at least 12 months. The relevant indexation factor in this example is 1.059. The Revenue publishes an annual table of indexation rates.
It is also worth remembering that when selling some shares in a company, where different tranches of shares were acquired at different times, the shares bought first are deemed to be those sold first.
A clearance certificate is required where certain sale proceeds exceed £300,000. Without one, the purchaser must deduct 15 per cent CGT from the proceeds and pay this to the Collector General. Capital losses, including your spouse's losses, can reduce your capital gains. Unused losses can be carried forward to the next year.
No capital gains will arise where an individual aged 55 or over passes on all or part of a business or farm to a child, niece or nephew who has worked full time in the business or farm for the five years immediately beforehand.
