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Video instructions and help with filling out and completing Can Form 4797 Dictionary

Instructions and Help about Can Form 4797 Dictionary

Music Applause you Music welcome this week to my beginner's guide to capital gains tax a tax that hits most investors on most assets sooner or later as soon as you try and sell them make some money capital gains tax comes to haunt you so that's an important area and we'll be covering off over three videos in the first video I want to talk a little bit at the scope of capital gains tax what kind of people get caught and on what kinds of deals in the second video I'll lay out a very basic calculation pro forma just introduction in other words I'll show you roughly how you go about calculating a capital gains tax liability there are one or two ways you can reduce it or is useful to know in tax terms and in the third video I will talk about shares and the share matching rules specifically because quite a few of you out there for investors will be most interested I suspect in the rules as they apply to shares because that's something we all buy and sell quite often so no more ado let's get on with the first video what is the scope of capital gains tax what is taxed by this thing called capital gains tax now the answer contains some rather old phraseology tax people don't talk in normal English so here's a bit of tax definition for you capital gains tax is paid by a chargeable person making a chargeable disposal of wait for it a chargeable asset so if you have a chargeable person making a chargeable disposal of a chargeable asset the answer is there will be capital gains tax to pay all right I thought video one rather than worrying about how much trying to work it out we just worry about this so do I need to pay capital gains X or not now tax rules are complex this is a very basic introductory video so I'll just give you a flavor flavor for some of the weirdness the tax rules or who gets caught who doesn't first of all what's a chargeable person all right well that's an easy one to answer a chargeable person is an individual like you will be it could be a company or it could be a partner in a partnership alright so if you're one of those three things you're potentially caught by capital gains tax but only if you make a charge of all disposal now people are already thinking why all the posh language you sell something not so fast yes if you sell something as a chargeable person you will probably end up paying some capital gains tax on the profit you make but if you give assets away thinking you're being clever you're going ha there are no sales proceeds and there's no profit and therefore I can't be taxed wrong Inland Revenue treat gifts as chargeable disposals everything about how they do that I mean if I give something away there's no sales proceeds it's free what they do is they impute excuse the language of market value into the transaction they go well if you had sold it this is what it would have been worth and so potentially you're going to be taxed on the difference between what we think it's worth even though you sold it for anything - its cost and we'll look at the calculation in just a moment to give a profit so don't think you can just give stuff away ha get around capital gains tax okay my uncle tried this trick with my cousin he's got a second property he thought why not give it away alright I'm away will escape inheritance tax which is something else talk about another video we'll get around couple of gains tax know if you give away something even quite large something owned in a family it could attract capital gains tax and there's a classic illustration there of how getting around these taxes isn't as straightforward as people think it is families in particular have to be very very careful okay what I mean by that is if I were it's like if I were to put me there alright I'm going to be a bit clever I'm trying to give assets away the Inland Revenue will look very suspiciously gifts or transfers between me and people above me in the family tree parents and grandparents they'll also look pretty carefully at anything I do on either side of me transferring assets to my wife am i trying to escape tax transferring assets to brothers and sisters so they look kind of sideways be careful don't just think you can give this stuff away and escape capital gains tax okay and they'll look at what I gift or transfer below me to children and grandchildren for example right so in a nutshell people think well if I haven't sold something there are no sales proceeds and I do it in the family be fine no no probably not you can still get hit for capital gains tax now the third point is you're a chargeable person so an individual a chargeable disposal which could be a sale or could be a gift with imputed sales proceeds of a chargeable asset now lots of assets are chargeable shares for example um but quite a few aren't and the second property I mentioned is also charge but more quite a few armed so I'll just mention one or two the main exemptions and we'll call it quits on this video this is not all the tax law of course it isn't otherwise how would a tax adviser make money all right but it is an idea and there still what's not a charge of last and quite and borne ones here so things that don't attract capital gains tax even if they're sold by a chargeable person.

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