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Mike Warburton introduces his 12 steps to heaven for unravelling the complexities involved in dealing with sums of tax liabilities
CALCULATING capital gains tax (CGT) liabilities has rarely been easy and changes which came into effect at the start of this tax year will often make the task more complex.
However, here is a 21-step guide intended to help you calculate CGT liabilities, assuming that the assets concerned were held at April 5, 1998, and were purchased after March 31, 1982.
Before you can calculate the gain on any asset. you first need to calculate the cost of the asset for CGT purposes. You also need to calculate the indexation allowance from the date of purchase to April 5, 1998, when the allowance was frozen.
These figures are shown in the table headed Indexation Allowance: March 1988. The steps to be taken in calculating the cost are as follows:
STEP 1: Identify the original cost of the asset.
STEP 2: Calculate indexation factor as follows -- deduct the RPI indexation factor for the date of purchase from the RPI indexation factor for...