Form E: Section 2 parts 2.9 to 2.14 (liabilities, CGT, business interests and directorships, pensions and other assets)

Mahie Abey, Family Solicitor

This post follows on from Form E: Section 2 parts 2.5 to 2.8 (life insurance policies, money owed to you, cash sums and personal belongings) and takes you step by step through completing Sections 2.9 to 2.14 inclusive of Form E.

Section 2.9 - liabilities

Don’t include items in this section which you have already listed elsewhere.

For example, your mortgage should have been included in the property sections (2.1 and 2.2) and any overdrawn bank accounts in the bank account section (2.3)

What you should list here are items such as bank loans, loans from parents or friends and store and credit cards. (For store and credit cards please remember to list even cards that you have but don’t use and which have a zero balance.)

1.      Liability - include the type and a brief description of the liability here – i.e. ‘Store card (Debenhams)’ or Bank loan (Lloyds TSB 345345345)’

2.      Other account holders - your ex-partner for example

3.      Total liability - the total amount owed for this liability

4.      Total current value of your interest - if the liability is joint (for example a loan you both took out to buy a car) make sure you divide the total liability by two and put that figure in here as your interest in the liability

5.      The total of all sums entered in box 4. above

Section 2.10 – Capital Gains Tax

Capital Gains Tax (CGT) is sometimes payable when you realise (i.e. sell) a capital asset and receive more than you paid for it.

Calculating the amount of CGT payable is not straightforward and I would suggest you ask your accountant to assist with this part of the Form if there have been relevant disposals in the last year.

However some basic points are:

·        For 2012/13 the first £10600 of gains made by individuals are exempt from CGT

·        The CGT rate is 18% where the total taxable gains and income in aggregate do not exceed the upper limit of the income tax basic rate band which for 2012/13 is £34,370.

·        Gains or parts of gains and income above that limit attract a 28% rate

That sounds complicated I know - but essentially if you are lower rate income tax payer you may qualify for the lower rate, and if you are a higher rate income tax payer you pay the higher rate.

Please note that no CGT is payable on the sale of your matrimonial home (although it is may well be on other property sold).

1.      Asset – brief description of asset, i.e. property address or business name

2.      Total CGT liability – this isn’t very clear: it’s your total CGT liability for the asset that you need to enter here (as it’s a personal tax liability). Ignore any CGT liability your ex-partner many have when the asset is sold.

3.      Total value of your potential CGT liabilities – the total of any figures entered in box 2. above

4.      Total value of your liabilities – D1 (see box 5. in section 2.9 above) plus D2 (box 3. in this section)

Section 2.11 – business interests

This part of the form deals with any businesses that you might have an interest in. Like some of the other questions we have already covered (e.g. CGT) you may well need you accountant’s help to answer these.

Fill in this page for each business interest you have.

1.      Nature of the business – describe what the business does

2.      Are you ….. – you will know which of these three you are

3.      Extent of your interest in the business – i.e. the number of shares that you have or the share of the partnership that you have

  

4.      If any of the figures in the last accounts (and the other boxes marked here)  - these really are questions for your accountant, unless you feel sufficiently knowledgeable to answer them

5.      Net value of your interest in this business – the current value of your interest in the business minus any CGT payable

6.      Total value of all your interest in business assets – the total of any figures entered in box. 5 above; if you are listing more than one business interest then only fill this box in on the last page

Section 2.12 - directorships

This section should be self-explanatory.

Just list any company of which you are a director (which you haven’t already listed in section 2.11 above).

This includes any non-executive director posts that you hold.

Section 2.13 – pensions

 Let’s start with a couple of definitions:

·        PPF – the Pension Protection Fund. This is an organisation that takes over pension arrangements that are in difficulty. You will know if your pension is in the PPF

·        CE – the Cash Equivalent value of your pension scheme. The CE value is how pensions are valued on divorce. It is this figure you should have obtained from your pension company (see the pensions section in my post Form E: the documents needed to accompany it.)

You’ll need to complete this page for each pension you have.

1.      Name and address of pension arrangement – this will be on the documentation you have from your pension company (the arrangement name might just be the company’s name)

2.      NI number – self-explanatory

3.      Number or reference of pension arrangement – again this will be on the documentation you have from your pension company

4.      Type of scheme – you’ll probably know what type of scheme the pension is; if you’re in any doubt, contact the pension company

5.      Date the CE (or other) value was calculated – this will be on the document containing your CE value that you have obtained from your pension scheme (if you haven’t got this yet see the pensions section in my post Form E: the documents needed to accompany it).

6.      Is the pension in payment or drawdown – you’ll know the answer to this

7.      CE value – this is the value you’ve asked the pension company for (see above); it’s often referred to as a transfer value

8.      If the pension has a reduced CE – this is quite technical. Sometimes occupational schemes that are struggling to meet their obligations will reduce the CE values of the pensions of all their members as a way of redressing the deficit in the fund. Your pension company will have notified you if this has happened, and they should have told you what the CE would otherwise have been.

9.      Is the PPF compensation capped?  - this only applies if your pension is in the PPF; again you will know the answer as the PPF will have told you

10.   Total value of all your pension assets - the total of any figures entered in box. 7 above; if you are listing more than one pension then only fill this box in on the last page

Section 2.14 – other assets

This is where any asset you have that doesn’t fit into any of the earlier sections should go.

Examples of other assets might be:

·        Share option schemes

·        Futures

·        Commodities

·        Business expansion schemes

·        Trust interests

·        Any asset held on your behalf by a third party

Note that it also asks you to list any unrealisable assets too (i.e. any assets which are incapable of being sold)

1.      Type of asset - include the type and a brief description of the asset:  i.e. ‘Share options (Smith Ltd)’

2.      Value – the total value of the asset

3.      Total net value of your interest – your share of the net value; for example half of the value entered in box 2. above if the asset is owned jointly

4.      The total of all sums entered in box 3. above

We'll move onto the income sections of Form E in my next post.