Identify which taxes apply to the following situations and state whether the tax is direct or indirect (a) A sole trader earns £100,000 profit in a year (b) A company has profit of £250,000 in a year and employs 30 employees (c) An individual sells an antique table for £100,000 which cost £40,000 eight years ago (d) A business buys raw materials from a supplier (e) A company sells a factory for £750,000 bought for £250,000 three years ago (f) An individual dies and bequeaths his estate of £1,000,000 to his children

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Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.