IRIS Capital Assets - Frequently Asked Questions

Question: "How to calculate Entrepreneurs Relief on a gain?"

Entrepreneurs Relief forms part of the Capital Gains Tax reform announced in the April 2008 budget.

Answer: To enable the automatic calculation of Entrepreneurs Relief on a disposal entered simply tick the "Entrepreneurs Relief" box on the relevant disposal screen. The calculation will take into account the maximum relief available to an individual however the software can not carry any unused relief forward at this time. The automatic calculation of entrepreneurs’ relief can be overridden by selecting the magnifying glass next to the tick box. The amount can be overwritten and a reason can be entered. This reason will be printed on the capital gains computation. If no reason is entered; “unknown” will be printed instead.

Question: "How to calculate indexation on spouse transfers made before 6th April 2008?

Following the removal of indexation calculations that forms part of the CGT reform indexation can be 'banked' on asset transfers made between spouse's providing the transfer was made on or before the 5th April 2008. Please refer to the fact sheet on inter spouse transfers for information on how to copy assets and shareholdings.

Answer: After cloning the asset or shareholding to the spouse simply select the spouse, edit the item and tick the "Spouse Transfer before 6th April 2008" box. The Capital Gains Tax Computation will now include the index calculation automatically.

Question: "How to calculate Foreign Tax Credit Relief on Capital Gains?

Foreign Tax Credit Relief on Capital Gains can be calculated on disposals entered into Capital Assets for completion on the individual and trust capital gains tax return pages.

Answer: When entering the disposal into Capital Asset tick the box "Foreign Tax Credit Relief" and complete the details of the gain in the window that appears. The software can not complete the gain under UK rules box automatically at present; to obtain the correct information simply print the Capital Gains Tax computation and input the gain amount shown on the computation.

Question: "How to tick the box for disposal of only or main residence?"

Page 2 of the main Self Assessment return has a tick box for the disposal of main residence.

Answer: Select Losses and Other information from the Edit pull-down menu. The editing screen will automatically default to the tax year selected. Click in the white box adjacent to the question Disposal of Main Residence?, and select OK once complete. If the desired tax year is not selected use the up and down scroll arrows to the left of the field to select the tax year or use the pull down list (down arrow to the right of the field) to select from a list of years.

(The Main Residence tick box does not apply to Limited Companies)

Question: "How to enter the disposal of shares?"

There is a step-by-step example to illustrate this.

Answer: The Share Holding section is used to enter details of the initial purchase of shares. Use the option for operative events to dispose of some or all of the shares. (The operative event screen is also used to enter details of the purchase of more shares of the same class.) Enter a date and then change the line that (by default) shows 'Acquisition' to 'Disposal'. The date must be entered before this change can be made.

Question: "How to select the client's spouse?"

The Capital Asset module is written as a stand-alone module. This means that it does not use the client/spouse radio button at the top of the main Personal Tax screen. Capital Assets will always start with the client selected.

Answer: To select the spouse, while in Capital Assets, choose Select Client from the File pull-down menu and select the spouse from the list of Personal Tax clients. Alternatively select the person as a client before choosing Capital Assets from the Edit menu.

(This does not apply to Limited Companies)

Question: "How to enter additional information?"

Pages CG4 and CG1 of the 1999 and 1997 Capital Gains schedules respectively are set aside for additional information. Please note that the 1998 schedule has no provision for additional information. IRIS will only allow additional information to be entered from 1999 onwards.

Answer: Select Losses and Other information from the Edit pull-down menu. The editing screen will automatically default to the tax year selected. Click in the white box adjacent to the question Additional Information? and enter the details in the screen provided, select OK once complete. If the desired tax year is not selected use the up and down scroll arrows to the left of the field to select the tax year or use the pull down list (down arrow to the right of the field) to select from a list of years.

(This does not apply to Limited Companies, there is no Additional Information box on the CT600)

Question: "Indexation in IRIS is less than I expected, why?"

Answer: The indexation allowance applied from April 1982 to April 1998 and was replaced by taper relief from April 1998 onwards. Assets held prior to this date are given indexation allowance to April 1998.

Note: Indexation continues to be calculated on gains for Limited Companies from April 1998.

Question: "How can I claim taper relief?"

Answer: IRIS will automatically compute any taper relief due on the disposal of an asset, share holding or other capital gain. Taper relief will be computed using the date the asset etc. was acquired, date of disposal and whether the item concerned is used for business or private purposes.

(Taper Relief does not apply to Limited Companies)

Question: How do i enter detail of connected people?

Answer: You can enter details in either the Asset, Shareholding, or Other Capital Gains areas.

Please be aware that capital assets is not capable of restricting the loss offset where losses are generated on disposals to connected parties.

(The connected people options have been disabled for corporation tax)

Question: The share ID rules appear to be calculated differently to Personal Tax?

Answer: Yes, the rules are the same for Companies and individuals up until April 1998 where new legislation was brought in with Taper Relief.

Share identification rules from 1 April 1985

For companies and other concerns within the charge to Corporation Tax, disposals of shares of the same class in the same company held in the same capacity must be identified in the following order.

Against acquisitions on the same day.
Against acquisitions in the prescribed period which is either one month or six months (TCGA92/S106).*
Against acquisitions in the previous nine days.
Against shares in the `Section 104 holding'.
Against shares in the `1982 holding'.
Against shares held on 6 April 1965 on a last in first out (LIFO) basis.
Finally against subsequent acquisitions of shares.

*For TCGA92/S106 to apply the company must have held at least two per cent of the entire issued share capital of the same class as the shares it disposed of some time during the prescribed period before the disposal. This is a significant stake in a quoted company, at present there is no way for IRIS to take this into account.