CAPITAL GAINS AT

Advance Taxation

Tutor : Owais MirchaWala

Capital Gains Taxes

 Capital Gains Tax ( CGI) Exam Part
weightage -10-15 Disposal
-

marks
sold
CGT assesed disposal asset when part
of
asset aries

of
-
is on
. -

an is issue
,

Disposal Proceed CDP) that how to allocate cost asset that

of
-
xxx ✓ on

Cost Asset ✓

of part
-
.

Chargeable gain Eg Mr A purchased 100 land

for
of
xxx .
-
. acres

Annual Exemption ¢2,3B ✓

£50.000 He sold £35.000
for€60.000
-
.
10 acres .

Taxable land
gain
✗✗✗ mu was

og remaining
.

Gain
Proceed includes
-

Disposal
received
Proceeds Disposal 10 acres

of
-
✗ ✗✗

-
Cost to sell asset DP = 35.000

Proceed ( 18.421 )
of Disposed
Part >
Disposal ✗✗✗ Cost 50.000×35.000

Agent
Commission 16,579 35,000+69000
Chargeabe gain
>

Asset
legal fees cost
Remaining
of Cost
-
Total 50,000

Part 118.421)
of Disposed
Cost Asset includes Cost
ofBasic
-
: -

- cost xxx Base cost 31,579

-
Cost to Purchase asset xxx

Improvements cost xxx

cost Asset Cost Disposed Part Total cost Disposal Proceed

of of
xxx -
= ✗

DP
mug remaining
+

Annual
Exemption £12,300 per
year
-
is .

-
It is not elf .

It to decide
choice
person
a

of
-
is

that
against
which disposal during the

he wants to
year
use AE .

to CGT
gain gets subject
-
Taxable .

Residential
Normal
gains Property gains
Basic Rate
taxpayer 101 181
- .
.

Higher Rate 01=2 201 28%

-

Rate
Additional
taxpayer
Tax Bands used tax
first
are in income G
-

then in CGT .
 ✓
✓

②
- - - → e- __ -

Small Part CSPD) Part Disposal

Disposal
- -
- - -

If SPD treatment will

apply then part
gain
on
-

Part
Disposal disposal deferred
be
can
up till
disposal
of
-

DP 50.000 asset Part Small Part Disposal

remaining
Normal
Disposal
= .

Part (31,25-0)
Of Disposed
> 100.00011
treatment Part
apply cost will
Cost 50.000 -
when SPD will
,
Base be 1
,
Part
Disposal Is Disposal
18.750 calculated calculated
Chargeable gain
50.000+110.000

following
in DP is

gain
manner : -
xxx -
No

deferred
Part
of Disposed
-
Total cost xxx
-
Cost as it is .

Part
Base cost
of
Asset Proceeds Disposed gain
xxx
Of
-
-

Total cost =
100,000 Base cost XXX > Total cost ✗ DP Base cost
Cost Part (31.25-0)
Of costDisposed
Dpt Total cost
mug remaining
- - xxx

Base 68.750
___ --- _--

Proceeds (xxx)
of
-

- - - -

-
Base Cost Disposed Part
Later Part treatment Total cost Base cost
Disposal
✗ ✗✗
Small
Disposal xxx
-

Part
DP = 250.000 -
Cost
Disposed
of cost
Cost (68,750) Disposal Part Land lacre Base ✗✗ ✗

of of
1
,

gain
181.250
gain
on Part disposal will be
deferred
-

through
SPD concept .
2
,
Later Disposal of
2
,
Later Disposal Of
- -

= --=-¥ -

-
-0 Remaining Asset
Remaining Asset

cost
-

Base
- -

- -
-
-

- DP xxx - DP ✗ ✗✗

Part Disposal -
Total cost =
100.000 -
Base cost ( xxx) -
Base cost ( xxx)
GO.at
of Disposed
Proceeds
DP =
10.000 - Part
chargeable gain chargeable gain
Part (4000 ) 90,000
of Disposed
cost > too ,ooo× 10.000 Base cost

6,000
Chargeable gain 250.000

Of Remaining
Base cost Asset Next land
Disposal
of
2
,
year
-

Total cost = 100.000 -

DP =
240,000

(4000 ) (90.0¥
of Disposed
-
Cost Part -

Base cost
Base cost 96.000 150.000

Later
Chargeable gain
Disposal
DP = 240.000

Cost (96.000)
144.000
gain
?⃝
 _____E
Conditions SPD treatment
for should
- - -

-
- --- -
I -

Asset Land
1, be 9
Building
-

Part Disposal treatment Proceeds Part Should be less

Normal 2
,
Of Disposal
than £20.000 .

Part Proceeds Part should be less

1,
Disposal 3,
Of Disposal
DP 17,000 than total value asset
of
20%
g
-
= .

(4139 )
of Disposed
Cost Part 4, Total Proceeds Land G
65,000×17.000 sale
of Building
-
> on

12,861 the should be less than £20,000

during
17000+250.000

gain year
.

treatment
Planning points while
opting
SPD

Asset
gain togets deferred
Base cost
of Through
- SPD .

cost 65,000 It not

Total is a choice
opt SPD 01=2
- = - .

Disposed Part (4/39)

Cost
of cost Planning points to consider include :
- -

Base 60.861 due to

1,
wastage of
Annual Exemption deferral
g gainBands
.

Later current Er
2,
Disposal 2
,
Tax available in
year
future year
DP =
340.000 in .

Base cost (60.861) to

glow availability pay tax
3, cash

gain
279,139
Availability of brought forward capital
4, losses .

5) Future expected tax rates .

Small Part Disposal

Part
1,
Disposal
will be
NO
gainbe chargeable now as
-

it will
deferred
.

-
Base cost
-

Total cost 65,000

Part ( 17.000)
of Disposed
-
Proceeds
Base cost 48,000

2, Later
Disposal
-

DP =
340,000
-

Base cost ( 48,000)

292,000
gain
 .in# . . , /. . . . .- - - - - -
✓
€
②
__ - - - -
__ - -

Destruction
-

Asset
- - -
- -

of
an - -
- __ ←
-

IF lost Asset Asset

an asset is
destroyed 012 is then Destruction
Of
Destruction
Of
-

for
CGT
purpose it is treated as disposed -
DP = 1.000 DP = 170.000

at
scrap value G at Insurance Proceeds . -
Cost =
( 15.000) cost =
¢0.000) -
Proceeds = 170.000

Scrap 0¥ Insurance Proceed loss ¢4.000) Reinvestment (15-0.000)

gain
Dp xxx > 100,000 - =

cost ( Xxx ) (80¥ -3B¥ Cash in hand 20,000

Deferral
.

/ loss 20.000

gain
xxx

- ____
✓
-
-
Chargeable now

> lower
--__ € of
- ___ - :

If replacement Base cost Asset

for
proceeds riot reinvested in asset 100.000
gain
are new
-
-
=

20.00T
get
then Destruction Asset Purchase hand
chargeable
will 150,000
gain of price cash in
. - -
:

(8%000)
1,0001-35,000
Deferral
DP = = 36.000 -
- -

-
IF proceeds will be reinvested in
replacement
asset cost (25.008 -
Base cost 70.000

then
deferred
11.000
gain
cat be
Chargeable gain
.

* * *. .

Reinvested 40.000
get deferred chargeable
-
:
can
-
now
-

reinvested
IF partial proceeds
will Asset
then
lowery
whole
gain Destruction
> are
of
-

Base cost
and
forPrice
asset be
deferred
be as
rest
get chargeable DP
will now will new -
=
27.000

deferred
→
gain -
Purchase =
4-0,000 whole proceeds -
Cost =
(2-0.000) -
Proceeds = 27,000

hand
gain (11,000) reinvested 7. ooo Reinvestment (22-000)
Deferred
→ cash were
gain
in .
-
.
-

Base cost 29.000 G. →

13¥ Cash hand 5000
Deferral
-
in

Destruction Asset 5000

chargeable
now
of
> lower 7.000
of gain
- =

-
Cash in hand =
-500£
Proceeds net reinvested full Proceeds reinvested Partial Proceeds Base Cost asset
for
new

DP ✗ ✗✗ DP xxx reinvested -
Purchase price =
22,000
Cost (xxx) cost ( )
xxx DP (5-000)
Deferral
xxx
-

Cost (xxx) Base cost 17.000

gain chargeable gain
✗✗✗ → ✗✗✗

now
Deferred
gain
→ 100% ✗✗✗

chargeanbtew Balancing
→
-
No new asset is 0 Deferred value

Chargeanbtew lower
purchased of
✗ ✗✗ →
in

replacement . Base cost

of
new asset ↳
gain
-
Purchase Price xxx 2
,
cash in hand > Proceeds -
Reinvestment .

Base cost asset

¥ of
new

Deferred gain
-

Base cost xxx

-
Purchase Price xxx

¥
Deferred gain
-

Base cost xxx

 .* *☐ *
⑤-
- -
- -
- - - -
-

=
-

Damage of Asset
-
- -

=- ← __ -

-8g
- - - _--
- --=
-
- -
-
- -

Asset
gets damaged
asset then
-
IF an ,

for
CGT
Damage of
Part Gain
deferred
it treated DP 0 IF not
purpose is as a
Disposal .
is

( )
Of Damaged
9 Insurance Proceeds Cost Part
DP xxx >
scrap O -550.000 ☒ 0

¥
Cost
of Damaged gain
DP
> Total cost 0
Damage of Asset
-

Part Dptmv 80.000

of remaining
DP =

Hoss (5%000)>300.000×80.000
gain Base Cost
Of
Asset Cost
Of Damaged
Part
xxx

gain
-
Total Cost =
50,000 30.000 80.000+400,000

Base Asset Part (O)

of Damaged
cost will be Cost
of
- -

Total cost ✗ ✗✗ Restoration cost 7.000 Base cost Asset

of
-
-
-

Part ☒ cost Cost

Of Damaged
-
Cost Base 57.000 - Total = 300.000

Renovation cost Part (50.0007

outflow of Damaged
-
xxx -

Base cost
Repair outflow 120.000
xxx -

- - -
- - -
- - - - →

e- →- a - ___ - - ←
Base lost 370.000
-

Gain can be
deferred ¥
95% 0=12
-

more

* ⇐ .
*•
Base
are .im . i.
*
Asset
for
cost -

DP =
20.000

Total Part (1%385)-3100.000

Of Damaged
cost ✗ ✗✗
Cost 20.000 Asset
Damage
×

of
1,
- -

than
Proceeds Part ☒ more

Of Damaged
4615 Proceed
gain
20,000+110.000 80.000
Disposal
- =

qs-y.is
-

reinvested
Renovation Reinvested
outflow
120.000
repairs
-

-
xxx -
in =

Base cost Base cost asset

deferred
✗ ✗✗ is
gain Damage of
- on .

-
Total Cost = 100,000

Cost Part 115.385) Base cost Asset

of Damaged
2

of
-

-
Renovation Cost -

- Total Cost = 300.000

Base cost 84.615 Proceeds Part (80.000 )

Of Damaged
-

Repair outflow 120.000

Base lost 340.000

 3 months
--= -

-5--0 Rollover
> ← - - - - -

Relief
-

① ⑦
- - - - -
- - - - - -
→ -

-
- - - -
-
- - - - ← -
-

IF asset and
business
Qualifying
-
a sells a - -
-
- - -

deferred reinvest
proceeds
IF its another asset
in
Qualifying Disposal Plant
gain g
is

within
Qualifying period then
gain
on sale
of
DP 140,000
- =

1) Asset Cost ( 85.000) Proceeds

deferred
asset be 140.000
Damage Of
-

= =
can
-
.

Proceeds 65.000 includes 55.000 Reinvestment

Qualifying
asset
gain
170.000
chargeable
-
=
-
: - =

155.000)
Renovation Rollover
Relief
Reinvested
=
63.700 1, Land 4
Building loot
-
- .

100=981 Plant G
reinvestment
chargeable
0
% 63,700
Machinery Deferral
2 now loot
of
-

-
=
✗ ,
.

65.000 3, Goodwill

than reinvested
Qualifying period includes Base cost
for land
•
-
As more 95% is • • -

gain deferred Purchase

asset
be 12 months
before disposal price 170.000
of
can .

I, - =

36 months disposal asset Rollover Es:*

↳
after of relief
. -

Base Cost Asset Base Cost 115,000

Of
2,

Total lost 250,000 IF 1001 Proceeds reinvested then 1001 the

of
=
are
- .
-

165.000)
- -

of Damaged ⑤
-

Part
- - - -
- - -

Proceeds
gain get deferred
-
will
-0
e-
.
- -
-
- -
-

Repair
-
63,700
-

outflows
- -

Base cost 248.700 IF partial proceeds reinvested

Of
then lower Disposal Machine
are
Of
-

will
get chargeable now and rest will be
deferred DP 90.000 Proceeds 90.000
.
= -
=

cost 125.000) Reinvestment Go

gain
1 =
-
=
.

Cash Hand 65,000 Cash in hand 20.000

2, in
chargeable gain
>
Proceeds Rollover ( 45.0007 >
Balancing
relief
xxx

( xxx)
gain gets deferred
lower
Reinvestment
chargeable 20.000 >
When
of
-

,
now

Base cost asset cash in Hand ✗ ✗✗

65.000
of gain
new 1 =
,

reduced Base cost Land cash hand 25.000

of
is .
2 in :
,

Base cost asset Purchase

for 70.000
new
price
- =

Purchase Rollover (45.003

price
relief
xxx
-
-

Deferred
Base cost 25.000
gain
-

Base cost xxx

Disposal land

Rollover available Business

of 450.000
relief only DP
-
is on use

portion asset (25,0¥

of
an .

cost
425,000
gain
 ⑤-- -0--2--2=0 Holdover
Relief
- - -
-
- -
- -
- -
- -

⑤
- - -

→
-
I
-

depreciating
Land reinvestment made asset
Disposal When is

of
-
in a

Plant then Rollover riot

Disposal
of relief preferredcost asset
is as
,

DP 35,000 Proceeds 35.000 Rollover the Base

of
reduces
relief
- =
-
=

(5000 ) Reinvestment GOOD Business

Cost 60-1 Non Business 40% which will reduce
capital Allowances
-
=
-
=
use = .
use -
-
.

Cash hand 28.000 456.005

Chargeable gain
30.000 in 760,000×60-1 DP 760,000×401 304,000
Dp = . = = =

(2-000) 450.000×601=(27-0.000) Cost 450.000*401=(18%000) Instead

Deferral Cost
of
Rollover
relief concept
of
Holdover
relief
-
-
=
-

28.000 lower 124.000

> 186.000 used rather
chargeable 8 chargeable gain Chargeable gain
now :
which is
gainBase frozen
is in

(186-000) ( ) than
against
asset
1.
gain
30.000
Deferral
→ loot
Deferral adjusted cost
of
-

: new

Base -28.500 124.000

cost
for land 2 cash in hand
Chargeable
now
chargeable now
-
-

Frozen
get
Purchase
of
7000 will earlier
price
gain chargeable
-
= -
on

(2000) Business Proceed 456.000

Deferral Cost
use 1 10
years
-
=
,
-

Base 5000 -
Reinvestment 650.000×1001=650,000
__ 2 when business use is ceased
=
,

-
1001 .
reinvestment 3, when asset is sold .

Later Disposal Land within 12m

before disposal
Of ①
>

---→ e- ② -

C-
- - -

DP = 50,000
-
-
- -

→
-
-

G-
- - - - -

cost
- -

-0
- -

D-
-
-
← ⇐ ___ -- -→--- -

- -
- -

gain
45,000
Disposal
of Building
D

Disposal Plant

DP
of 195,000

Business use = 701 NgÑBusiness use = 30% Cost (123¥

46.200 DP= 66.000×301 72.000
DP 66,000×701 19,800
Chargeable gain
=
= =

Cost (1%600) (8%0) (64,000) Depreciable Plant

28,000×701 Cost
Deferral
= =
= 28.000×301 = →

Relief frozen
8000 Holdover
Chargeable gain
26.600
Chargeable gain
11,400
Chargeable
now →
=

"" " (57-00) Rollover ( )

relief
"" > "W "
-

"

⑨ 72.000
:

11,400
chargeable now 20,900
chargeable now Base Cost
of
new asset ↳
gain
:

ÉOO
-
Business use Proceed -
-

46,200 -

Purchase Price 187,000 2

,
cash in hand =

Reinvestment 46.000×551=(2%00) ( ) (195,000-187000)

Deferral
-
-
-

Cash in hand 20.900 Base cost 187.000

lower Later Plant

of Disposal Of
26.600
gain
1
,
=
DP = 475,000
2
,
Cash in hand : 20,90£ Cost ( 187.007

gain 288,000
*
Frozen gain 64.000
352,000
 - - - - - -0 -

Shares 9 Securities
- -

land When shares 9 securities sold CGT

Disposal
are is

of
-

-
DP = 130,000 Calculated in normal manner .

-
Cost (90.000) > Reinvestment is done -

However an issue arises when shares & Securities

40.000 G
depreciating
•

chargeable gain in asset

of purchased
same
company of
same class are
• •

:( 40.008*0 Holdover claimed

Deferral disposal
be transactions
relief
will At time
multiple
-1001

ofsold
in
.

chargeable that
will
gain frozen
now -
-
be . an issue arises which shares are

first .
It is
important to
identify ,
so that cost

Base cost Asset Proceeds

for determined
New -
= 130.000 Can be .

Purchase price = 175.000 -

Reinvestment = 175.000 -
In order to determine that which shares are

( ) Order Rules
Deferral loot Reinvestment sold
first
HMRC has
defined Matching
-
-
. .
- .

Base cost 175.000 As Order

per matching rules
,

1
,
shares purchased in same
day are sold
first
sold
later Disposal 3 Shares
purchased in
following 30
days
are

DP shares
pool
from
225,000 3,

cost (
175.000
)

gain
50.000 share
pool the cost shares
averages of
-

*
Frozen 40,000
gain 90.000 considered
•
Bonus issues is as shares
purchased
at zero
cost .

Right issue
¥
exercised
at Exercise
,
is treated as

shares
purchased price .

In exercised
of Rightsold if rights zot
-
case issue are
,

rather then it treated

they
are is as
,

Part
Disposal shares
of
.

If Proceed
Disposal
of 1,1=3.000 of Rights
> sale is

less than
higher of value
2,5%
of
total shares
Of
then
gaincalled
on sale
rights
of Part
can be
deferred
.

It Small
is
Disposal .
 |
- - -
- - -

- - -
- - - -
- -
-
- -

-
-
- -

-
- -
- - - - - -

-
-
- ←
-
- -8 -
-

v0
- - -

✓ - -
⇐ ←

v0
- ___ ✓
_--_ __

g-
- -

-
- - - -
- - - - -

-0
_-

___-
-
-

- -

4,000 18.000
Disposal of
Shares Disposal Of
Shares on 1-1-2020
4,000 40,000 8,000
DP = shares = 1.1.2020
Disposal of
Shares = 11.2020 DP 18,000 shares 150.000

Cost -
DP 8.000 shares £50.000 Cost

Purchase
( ) ( ) Cost Purchase (6,000-8 137.000)
Same
day Same
=

Day
- -

-
- -

Purchase (5.500%8
Following 30 days Purchase ( ) ( ) Same
Day Purchase (3.000 )
shares ¢-27,000) Following 141,000)
=

Days
-

30
-
- -
-

Share Pool 4,000 Shares =

¢8,229)
-Fng3ODayÉA(25¥
-
Pool
Share 2500 shares
(1--21.000)
(1--7.000)
-

Share Pool 6.500 Shares ( 19,741)

52.2-59
Chargeable gain gain
21.771
Chargeable
chargeable gain ( 5000)
Share Pool Share Pool
Shares Cost Share Pool Shares Cost
Of
No No
Of
. .

1.1.2002 Purchase £4,000 NO Shares Cost Purchase £19,000

Of
=
2,000 .
1.1.2010 = 6. ooo

1.1.2007 = Purchase 3,000 £8,000 1.1.06 = Purchase 3,000 £9.000 1.1.2012 : Purchase 7,500 £22,000
" " "* ⇐ *. .. .. *. *. *. *.
7. °O° £31,900
£31.900
7500 £21,000 1.1.2020 =
Disposal (6,5-00) (1--19,741)
1.1.2020 Disposal ( 4,000) (1--18,229) > 7.000×400 I -1.2020 (25-00) ¢-70003 7,000 £21,259
Disposal
=
=

3.000 €13,671 5,000 £14,000

 - - - -

-50--5 -
- -
-
-

- - - -
= ۃ- -

-
-

-
-

--

⑤
-
e- --- -
- - - -

- --_ - __
-

- -
-

-0
→
£12 /share £36.000
Disposal of Rights
DP 3.000 shares ✗ -_

④
← → - -
- - -

←←
cost DP =
6,000

( ) ( ) (38/0) £6.000
of Rights 2190
Same Purchase cost >
£24,00011
Day
-
- -
:

( ) ( ) 1=6.000+(12.000×465)
Following Days Pur share Pool chargeable gain
-

30
-
-
.

Share Pool 3.000 shares (65-00) No shares Cost

og
.

Purchase £5 £60.000 Share Pool

1.
January 2005 12,000
-
= ✗

2
£29.500 Bonus 4,800 Cost
Chargeable gain Shares
December 2006 No
0g
-
-
15 .
=
s .

-
= Purchase 17,000 €55,000 Purchased 12,000 £24,000
( ) ( €3810)
of Rights
Share Pool 33.800
Disposal
-

No .

of
shares cost -
Exercised
Right issue
z 16.900 ✗ £7 £118.300 12,000 £20.190

1.1.2002 : Purchase 10,000 £20.000

£6.000 £233,300
1.1.2007 -

Right issue 1=2,000 ✗ £3

€233300
50.700
→ - -

(1--124,242)
-
-
-

(2%000)
← →

Disposal
-

27000
-
-
✗ ✓
- -

50,700 → - - - __ -

→ -

£26.000
- -
→---
-
- - -

12,000 23,700 f- 109,058

→ 2--0--0
¢-6.500)
-
--

1- 1.2020 -_
Disposal ( 3000 )
9.000 €19.500
Of Rights
Balance Dp =
27,000 ✗ f- 13 =
351,000 Disposal
Cost =
(124,2-42) -
DP = 17,000

226.758 :( 8384 ) £17000

chargeable gain of Rights
-

Cost >
£36.000 ✗

chargeable gain 8616 f- 17.0001-(20.000×+28)

Share Pool
No Shares Cost
Of
.

-
Purchase 15,000 £29.000
-
Bonus issue £ 3,000 -

-
Purchased 2.000 £7.000

20,000 £36.000

( ) ( £8384)
Disposal of Rights
-
-

20,000 £27,616
 ③ E- -0 -0
⑤ ③
-
- --- - -

=_②
- -

Relief
( BADR)
- -

Business Asset Disposal

⑦
-
_____ - -
--
- - - - -
- - -

-
- -

IF a
person sells business then he
may
-
-
a -
-
a
,

>
Part Disposal
of Rights Of Rights £3.600
BADR
Disposal Disposal qualify for .

1500 Proceed BADR CGT

DP
Disposal reduces rate to 10%
of
- = -
= -
.

Cost (8/4) >

£35,000 ✗ £1500
of Rights lifetime
£5220
Higher qualify for
limit which BADR
og
:
>
of gains
-
-
-

686 £1500 + (15.000×1--4-2) £3000

chargeable gain £1.000,000
-
is .

(24.000×1--4.2) 5250
Following
51.x £3600T BADR
disposals of
Business
qualify for
-
=
-

Pool
share
ownership period before disposal
¥
was

cost As lesser be
therefore gain
shares DP
of
no can atleast
2years
. -
are .

Purchase £35,000
deferred through unincorporated
15,000 SPD 1 sale business
of ongoing ( sole
- .

, .

Disposal ( ) ( £814 ) Trader Partnership)

of Rights 01=2
-

- .

15.000 £34,186 asset

of hasunincorporated
-

share Pool 2, sale business

shares cost which ceased Assets should be

of
No .
.

Purchased 24,000 £74.000 sold within cessation

3yeo.rs of
-
.

( ) ¢-36 ¥
Disposal
of Rights
3, sale Personal co A co is
-

shares
of
- .
.
.

24,000 £70.400 co conditions

personal
if following
. are

satisfied :

a, SH is an
Employee
b) Ownership is 5-1
.

01=2 more

↳ Co . is
trading co .

. .
. ..
.
.
.. . .. .
Eml scheme
,
then at disposal ,
condition
of
BADR waived
for
at least
- 5-1 .
shares is .

BAADR is not available individual

of
-

on sale

business assets .
It is available on sale

whole business
of
.

irrespective tax
BADR applies bands However
of
-

it consumer Basic rate band which increases

,

If person sells his business to his tax rate BADR

gains
-
a own on non .

by him)
Close co . ( which is controlled then BADR
,

to
gain relating Exemption against
not available Annual E. losses
Always
will be on
-

use

goodwill their
higher
BADR CGT is
gains first
.
non ,
as .
?⃝
→ =_
==⇐BAD_÷ • a - Investor
Relief

?ayga
→
to lot
-

Investor also restricts CGT

BADR
relief
rate
- -

of
-

→ →
.

_②-
-
- -
✓

qualify for
Limit which investor
relief
-

of gains
- - -

- - -

②
-

£10 million It limit

lifetime
-
-
- - is . is .

CGT Gain investor

qualify for relief gain
-

which is

BADR
Chargeable gains eligible for
35.000 individual which
by
sale shares an

of
=
-

on

, ,
g must g.n.wnge.na.mn
,µmµ, CGT µ,
gang
.am, , ,, g
, , ,
.
.

Taxable unlisted
gain
35.000 ,, , ,, be Co
g. of
.
, ,
1 shares
,

Tax 35,000 ✗ lot 3500 Annual

Exemption ( -

) 2, Stl must not be

employee
=
-
=
= -
an
=

Taxable 12,000 should issued

gain12,005
be co
3, shares
newly by
.

Eax = ✗
10=1 = 1200 4,
Holding period should be at least
-

not
=

eligible for BADR 6

Chargeable gains 20.000

years after April 2016

=
- .

Annual Exemption =
(12,302
Taxable 6.700
gain Chargeable gain not eligible for BADR 25.000
- =

Tax = 6700 ✗ 201 = 1340

=
-
Annual
Exemption =
(12.3¥
Taxable 12,700
gains
T¥ -

12,500 ✗ lot . = 1250

200 40
✗ 20-1 .
=

Basic Rate band = 37,500 12,700 1290

-
Income tax = Nls 40,00 - Basic Rate band = 37,500

G- ¥ Income tax ( 11,000)

saving -
= Nts

Dividend ( -

) saving (2.000 )
Capital tax 22.500 Dividend ( )
gains
-
-

(35-000) 24,500
BADR
gain CGT
-

BADR (1%000)
gains
✗ on BADR
gains
-

12,500
gains
✓
Non BADR
 -②--
Paper
- -
-
-

Paper Takeover
- - -

to -

→
Paper to paper takeover is
referred situation
-

- as a -

→ - -

→
shareholders
-

old
exchanged
-

shares are →
when
-
a - -

- -

with new shares .

-- __ - - __ -

cost
situation at 1998 Purchased 15.000 Jpk at
of
This time Takeover shares
can
happen in
of
-
=

consideration is 15.000 shares £3 £45,000

✓

form of
co when in ✗ =

og
.

shares .

Acquisition Ltd consideration % Cost Allocation

This can also
happen at time
of reorganization
2008 =

by A mu
g
.
-

" °O°
Co it old and 37,500 E3 £112,500 63.8% £28,710
Ordinary
when .
cancels shares -

shares = 5 ✗ 2
= ✗ =

Preference
15000
them with shares shares 3 22,500 £1.5 £33,750 19.11 f- 8595
replaces new .
:
✗ =
✗ = .

2
-

-
Cash = £2 ✗
15.000
2
=
€15,000 = £15,000 8.5% £3848 ✓

15,000
f- 3848
to paper transaction done tax QCB I 7500 ✗ £2 £15.000 8.51
When
paper is ✗
-
= = =
2
-

department Paper to Paper "" 1001 £45.000

relief
allows as .

result
disposal old cash Portion QCB Portion
gain
which shares
of of
a on

15.000 transaction tax

is
deferred
until
disposal
of
new shares . DP = Mv = 15,000 DP : MV = -
In situation
of Paper
to
Paper ,

IF consideration involved Cost Allocated 13848) cost (3*18) department allows BADR
there
types of
shares
multiple
on
-
are new even

not completed
chargeable gain Chargeable gain
11,152
period
11.152
if themyearsTaxholding
then :
is on

1, For share consideration will be

deferred Freeze ¢1,152) department
will consider total
2years
gain
.

shares will be
acquired at cost
of chargeable
now
ownership of
old 9 shares combined
-

New new .

old

for
shares .
-
For
Paper to
Paper takeover
deferral relief ,
it

get satisfy following

consideration
cash
gain
will
chargeable 2019
Disposal A Ltd shares to conditions
of necessary
2
,
=
. is :

loan €30 Takeover should commercial

geniune
For notes consideration 300,000 be
for be
3) will DP 10.000 shares ✗ 1
gain
=
,

cost £28,710 ¢656 ) It should

calculated
deferred not
for
tax
be but it will be =
✗ 10,000
=
reasons .

till 37.500 avoidance

disposal of
loan notes .
.

IF Proceeds Takeover should

offerthen0¥
than £3.000 292,344 public
Chargeable gain
-
cash are less 3 be a

total consideration its transaction

OI 5-1 .

g ,
then
gain if atleast
it is a
private
traded
deferred
can also be . 25% shares should be .

to portion
defer gain
In order cash
of
-

cash
proceeds arededucted
from
Base cost ,
>
1,
Availability of BADR

which will be allocated to other considerations 3 Availability Tax losses

of
.

bands
-

Paper to
paper
relief
can be
disapplied and 3,
Availability of Tax .

old made
gainIn
on shares can be
chargeable
.

this case New shares will be acquired at

MV .
 - - - - -
-5 - - - -

-0--0
- - a- -
- f- # -
-

→ - -

Purchased 10.005 shares in Roundhouse pleat

cost £20.005
of
Takeover
by NPK
MU consideration % Cost Allocation
'
°Y°° 10.000 £28
of
£28.000 £7.000
Ordinary
-

share =
I ✗
=
✗ = 35%
"
"""" "" " " "" """
"""
"" " " " "" ""
1°
-
Cash = £4 ✗ =
£40.000 =
=L 40.000 50% £10.000

=L 80.000 100-1 .
£20.000

cash Portion QCB Portion

DP = 40.000 DP 12,000

Cost Allocation (10.000) cost G. 000 )

30.000 9,000
chargeablegain Chargeable gain
Frozen (9. ) ooo

-
 ← --
2011
- -- - - -- -

⇐ 9,000
Disposal shares
of
-

✓
DP 9,000 £20 £-180,000
-

= ✗ =
-

- -

-
Cost = €42,120 ✗ 9,000 =
(31.5-90)
--

- -
-
-

-- -
[⑦ - -
-
12,000

148.410
gain
-

1998 =
Purchased = 18.000 shares in
Alpha Ltd at Ellshare .

Total cost 18,000 £7 £126.000 Disposal 2,008 QCB

of
= ✗ = -

CGT / no loss
Exempt from
:

gain
- • no

2008 =
Acquisition by Mary plc
on
disposal .

consideration % proceeds Frozen

cash
get chargeable
As
gain
mu are will
of £72,000
-

Ordinary shares 12,000 Shares £6 gy.gg/ less than 1=53120×2,000 1--66--40

Of
51
chargeable
-
= ✗ = -
now : =

Cash =
£9,000 : €9.000 ✓
4.3-1. total consideration :
• 16.000

QCB f- 8 £128.000 its

gain
- =
16,000 ✗ = 61.3-1 .
can also

£209.000 100% be
deferred
.

Cost old shares £126.000

of
- =

-
Cash proceeds G- 9.000 )
Base cost £117,000

consideration % Cost Allocation

of
mu

Ordinary shares =
12,000 shares ✗ £6 £72,000 361 .
1=42,120
-
QCB =
161000 ✗ £8 £128,000 641 . £74,880

£200.000 100% £117.000

QCB Portion
DP : MV =
128.000

Cost Allocation (74,880)

53,120
gain
Frozen (531/20) > 16,000 QCBS .

-
 -
a- -
-
- - -
- - -
2019

Disposal 15,000 shares

of
-
-

DP = 15,000 ✗ £22 =
£330,000
-
-
Cost =
£99,450 ✗ 15.000=(6%806)
-

=
22,000
✓

-0
-

£262,194
-
- -
- - - -
-
.
gain

1999 Purchased J Ltd shares 28,000 shares £9 £252000 > cost

Disposal 8. Foo QCBS
of
✗ : -
= =

additional / loss be calculated

gain
-
No will

Acquisition Justin plc

disposal they
QCBS as

by of
2008 = on are

consideration % proceeds asset

exempt
mv > As cash
of
are .

£7 £154.000 less than total consideration be

Ordinary shares 22,000 ✗ 40.51 5%
of Only frozen gain will
chargeable
=
- = .
-

Cash £18,000 £18,000 4-71 £73.450 8.000=1--22,600

•

gainbe
cash
portion can

chargeable
=
-
a- • • on -
now : ✗

QCB £8 £208,000 547% 26.000

deferred
- = 26.000 ✗ = .

£-380.000 100T .

Cost old shares

of
-
= 252,000

Cash
proceeds 48.000)
Base Cost 234.000

mu consideration % Cost Allocation

of
£7 £154.000 42^5-1 €99,450
Ordinary shares 22,000 ✗
=
- = .

-
QCB = 26,000 ✗ £8 = £208,000 - 575T .
£134,550 -

£362,000 100T .

£234.000
QCB Portion
-
DP = Mv =
208,000

-
Cost Allocation (134.550)
73,450
gainFrozen (7%450) > 26.000 QCBS

-
 35,1%-00×100=71
-0 Later shares
Disposal
-
- -

of
-
- -

- - - -
-
-
-
- - - - -----
Dp =
£9.5 ✗ 70,000 = 665,000

_⑤←_②②
-
_---- - - f-
E -← --

- - -
cost ( 420.0003
- -
- - - -
-

245,000
chargeable gain
J Jpk (12.300)
qualifies for BADR AE
-
Mr. in as :

232,700
1 he owns more than 5-1 shares Taxable
gain
.

2)
for more than
2years 9 Tag =
232,700 ✗
20=1 .
=
44£40
employee of Jpk
3 he is an .

In he riot
✗
Pk he will
n§ get BADR
-
as is

an
employee
.

(old shares)
-
Mr. J will make
Jpk gain chargeable
as due to BADR its rate will be 10% .
On ✗
PK
(new shares) there is no BADR i. tax rate will

( I
be
higher taxpayer )
20% Mr -
is rate .

-
Purchased Jpk shares = 35.000 shares ✗ £3.5 =

** ⇐
=

Takeover Pk
by ✗
-

⑧ of consideration
2×3570=70.000 Shares £6 £420,000
Ordinary shares ✗
- = =
=

DP : MV = 420.000

Cost ( 122,503
297,500
chargeable gain
AE (12+300)
Taxable 285,200

Tax 2851200
= ✗
10¥ = 28520
2-
?⃝
 5-0
Gift IF asset
gifted for free that
- -

Relief
1001 I
-

is
gift
an is a
-
nooo

From tax
perspective gift asset
gift
then the will
get Gift
Asset
is is made
ofat
whole
of gain
an
of
-

market This
treated as
disposal
a value .

deferred
.
DP = mu = 77.000 -

(4%000)
means that
gift of
an asset can lead to -

IF some consideration is
charged that is a
partial cost
available
gift
then
chargeable gain
30.000
gift relief
loss made will be
chargeable gain
is on
012 .

element
Gift relief (30-000)
DP
gift only
= met = xxx .
-
-
loot .

Cost Asset Consideration

charged Gift element chargeable
now
-

> mu
g
=
.
-

Hoss
gain
xxx

Gift relief cannedconsideration Base

then be claimed cost
if gift relief partial However for
However is available in son
gain
- -
.

can be
deferred
and
transferred to
by charging reduced
some
from gift
element Donee ,
-
market value = 77.000

Base cost Donee reduce (30-000)

for
will also
gift relief Gift relief
.

can be ,
which .
-

Base 47000
Gift of Cost
Asset Donor Base cost
an
by for Donee

DP Mu xxx Mu
of
Asset xxx
Gift relief is
only available on business use
-
= -
=

( ) asset If involved
cost private use

Gift relief ofbusiness

is
xxx
portion an
T
.

reduced
- -

gift
- -
-
- -

gift relief gets

✗✗ ✗
Base cost asset then ↳ loot
chargeable gain
✗ ✗✗
in
any
. .

Gift relief Gift relief

(xxx) Business
Gift of
assets Asset
chargeable gain
:
✗ an

Total assets
chargeable
now -

-
Dp = MU = 63.000

-
Cost (38.008
I't to to
Gift relief
conditions is
It claim and
gift relief
25.000
is available when
following
are
necessary chargeable gain
-
-

and 45.08
satisfied
:

defer gain
Donor can
disapply gift hisrelief tax Gift relief loot
- -
. .

joint gain chargeable

4 it
Donor Donee election make
chargeable
µ
1, makes now
of
now
-

a .

2 Donor 4 Donee both must be UK resident .

rates are lower .

within Base cost

If Donee leaves UK
residency Gyears for
son

63.000
get chargeableassets market value
then
gift relief
will
of gift
=
.
-

(25-000)
3)
Gift should
beg of
the
following Gift relief
: -

one

Base cost
i,
Gift of unincorporated business 38.000

ii.
Gift of unquoted shares

Gift ofhavequotedat
in, shares in which

least
before
donor - 51 shares

gift
iv.
Gift of property qualifies for
IHT
which

Agriculture asset
property relief
in .

V,
Gift of to immediately
which is

IHT
chargeable
.
 - -

←
-

asset
-

partial
GJIF -
:
-

-
-

=_--⑤ -
-

-
- -

-
-

-
-

- -
-

-
-

-
-

-
-

Gift of
-

an

DP = Mu ± 176.000 ✓

Gift of Asset

96,000°
Gift of shares to son
.

Cost (3%000) Dp = Mv =
> Partial claim
g
GR is DP :
mu = 179,000
Consid
137.000 Cost (2%000) not to Cost (63-000)
.

allowed Mr .k has
Chargeable gain charged
mu - .

(13%000)
Gift relief
176.000-46.000 69,000 consideration
Gift element
chargeable gain
>

Chargeable gain
116.000
Charge
-_
some

(5-2700) (8%363) 400.000

Chargeable 7,000
Gift relief that
Gift relief
> 116.000K
from
now so
Donee
,

16.300 element to 31.637 400.000+150.000

Chargeable gift£52,700 fails will Chargeable
now now
a

Base Cost son blf loss ( 4.*

for $76.000 (1%300)
Which

GR
-
market value = Annual
Exemption reduce accordingly .

430.007 gain 96.000

Gift relief Taxable
mugelement
Asset
-
-
-
:

Base cost 46,000 (52%0)

Gift
-

Consideration charged 43,300

✓ ✓ ✓
- -

par-tiaig.gr
- - - -
__ - - - - - __ -

e- - - - - _ - -
__
-

Gift of asset
-

an

DP = MU = 86.000 ✓
Gift of Asset
83.005
cost (3%000) DP > Partial claim GR
g
= Mv = is

47,000 Cost (34,000) not allowed Mr .k has to

chargeable gain
.

Gift relief (30.0¥ Gift

element 86.000-56.000 49.000 consideration
chargeable gain
>
Charge
__
some

(2%300)
Gift Relief
17000 that
-

chargeable from
now Donee so
,

19.700 element to
chargeable gift£29.300 fails will
now a

Base cost Son blf loss (7.000)

for
which

Market value 86.000 Annual

Exemption ¢2,300) reduce GR
accordingly
=
-
.

( ) Taxable
Gift cost
83.000
Relief gain
30.000 -

Asset
mugelement
- -
:

Base 56.000 (2%300)

Gift
-

Consideration charged 53,700

 - __ - __ -_ I
-
-
- __

Incorporation Relief IF consideration

givenconsideration
by company includes
-

, →nares
---
-
-

=
←

Incorporation refers to a situation when a some non shares ( loan notes 01=2
business cash) IR be consideration to
person converts his unincorporated ,
then will on shares
Transfer of Business
Company
( sole Trader 0¥ Partnership) to portion 50.000
an
only chargeable gain
=
-
.

incorporated structure (
company) IR Shares consideration
Incorporation (50.0¥
gain relief
✗
-

=
.

Total consideration
At time
incorporation all assets of
business
chargeable now

of
-
-

are sold
by an individual to a
company .

In Trader 012 Partnership structure assets IR carnet be claimed

partial In order to Base cost shares
sole in
③
- -

, .

IR to
are
of
owner who is an reduce
partial gain some non shares Market value 140.000
-

on name
-

individual consideration has to be taken Incorporation (50¥

relief
. -

Base cost 90.000

In assets
company are on name
of
-

company .
-
IR can be disapplied and
gain
can be

- This incorporation transaction will lead to made

chargeable
now
,
rather than
deferring it Later Disposal
of
shares

assets Base Cost Shares DP

against
loss
01=2
Of
are 320.000
chargeable gain
as
=
.

disposed (90-000)
being from
individual
ownership to cost
230.000

Company .

gain
Sole Trader Assets
0¥ Disposal
of > Company
⑦ I
-

=
-

-0
→

Partnership ×
g-
-

individual DP -
- MV = xxx

to
ownership cost
Transfer of Business company
75.000
gain chargeable gain
xxx -

Incorporation relief G5
Capital at time incorporation be
chargeable
now

gain of
can
-

deferred through incorporation

Base
relief
cost
.
This
shares
gain Base cost shares
will be
adjusted in
of of
.

Conditions value 195,000

relief
Market
for incorporation
-
are : - =

Incorporation relief (75-000)

1
Ongoing
business should be
transferred
-

assets Base cost 120.000

2> All business
except cash
of
should be
transferred
.

Consideration be Later Disposal shares

of
3> should in
form of
shares . DP 225.000

Cost (120.000 )
105.000

gain
 to company
t
a

-00
- - - - - - - -
- - -
- -
-
-
-
- - -
- -
- -

- - -
- - - - ---- -

_---
-
- -

c-ostgolet-ade-u-i-nese.ua
- - -

-6-95,000
-

F-cost SOE F-dÉBÉ5J

- -

was 30.000
of
.

Incorporation
of
business
✓ Transfer of Business to
company
Incorporation Business DP MU 300.000 DP MU 100.000
of
= = =
= ✓

(5-0.000)
-

DP = mu = 52.000 cost =
(95-000) Cost >
Normally IR cannot

cost (3° 50.000 be claimed

chargeable gain Chargeable gain
205,000 ✓
in

chargeable gain
22.000 IR (1-0,834) >
205.000 ✗ 250.000 IR (30-300) partial However
.

IR (16.067) 34,166 19,700

Chargeable
300.000
by taking
38.000
Chargeable
→ 22,000 ✗
now now some
^

chargeable now 5923 52,000 b) f losses (7400) non shares

Base cost ( 12.300) consideration IR

Shares Annual Exemption
Base cost shares mu
of
shares 250,000 be reduced
of og
can
- -
=

Mu shares 38.000 IR ( 179834 ) to partial

og
-
= -
.

IR ( ) Base cost 79,166 IR Shares Consideration

gain
-
16.067 = ✗

Base Cost 21,933 Total Consideration

Disposal of
shares

30.300=50,000 Shares consideration

Disposal of
shares DP = 320.000 ✗

DP = 92,000 Cost ( 79,166) 100,000

(21,933) 240,834
gain
Cost shares consideration =
60=600
70.067
gain Total MU business 100.000
Of
=

Shares consid .= 60.600 Non shares Consid . : 39.400

IR (30.300)
Base cost 30.300
 to a company
Assets 9 Transactions CGT
Exempt Interaction between CGT G IHT
-

from
- - - - -

← -- ___ - -
a- -

Transfer of Business to
company Any disposal made between
spouses G Civil
-

DP MU Partner CGT Assets

200.000
exempt from
are
=
=
are
.

cost ( 30.00£ → Normally

IR cannot
transferred at cost / No loss sale Asset
Gift of Asset
gain of
.

> No

170.000 be claimed
chargeable gain
in

IR ¢43 -
partial However 012
transfer asset made at
Any disposal of
. -

Gift during life

26,300
chargeable
now

by taking
some time death exempted from
CGT Assets CGT IHT
Gift Death
of
are .
on
a
blf losses ✗↳ at / NO loss ✗
transferred
death ✓
gain
non shares are Mv on .
> No

Annual Exemption (12-300) consideration IR > Probate value .

reduced
can be
Following assets are
exempt from
CGT irrespective CGT IHT
-
-

to partial that to
they 4 sold
go.in/N010ssCG- IHT ✗
> No ✓ ✓ ✓
.

whom are .

IR Shares consideration
gain cash vehicles
= ✗ 1, , y y

Total consideration Trust

2, Debtors 5) Venture Capital Shares
Disposal at MV
Through
Er PET Death Estate
consideration
3
Inventory G Chattels
having cost DP CLT

143,700¥ 170.000 ✗ Shares

✓ below £6.000 .

200,000
Tangible 9 Movable assets

shares consideration = 169,059

chargeable now
Gift Relief
-

unincorporated business

Total mu
g
business = 200,000
unquoted shares
-

-
Quoted shares in which Donor

has 5% ownership .

Shares consid 30,941 Transaction

169,059 Non shares Consid
immediately chargeable
- = -

IR-443.to to IHT
13%1-25,359 Transaction APR
eligible for
-
in

IHT .
 Associated CGT Assets
Disposal
IF business
for BADR disposal
qualifies
-

a on
,

then BADR can also be claimed on

assets used
personal in business
¥ following
conditions are
satisfied
:

Wasting Assets
Assets
Non
Wasting Assets

years 0¥
than
life Of have
life of
BADR Assets 60
1 Business should
qualify for which have which more
Goyears
-

2, Personal asset should be used in less

business

3) Personal asset should be to

given
business rent If rent
free
is
any
.

to market Chattels Chattels

paid then on
proportion wasting chattels
wasting
Non Non
Wasting Non
Wasting Non Chattels
BADR These These
rent
portion will not be available . -
It is a
wasting asset -

are
wasting
-
are non
wasting -
These are non
wasting
4, Personal asset should be used
by which is
tangible Eg assets which are assets which are
tangible assets which are either

business
for
at least
ayears movable either
intangible 0¥ E. movable
intangible 0¥ immovable .

-
. .

Land
immovable
E¥ . -

°
-

Normally these assets E¥ . -

Painting -
Shares

Plant 9 Goodwill
qualify for capital allowances CGT will be
Jewellery
- -
-

machine] as it includes Plantes calculated

by using
-

Antiques
CGT assessed
Machinery normally .

Special rule .
-
Normal is .

assets IF cost 9 DP both

Capital allowance are
-

to DP below £6,000 then it

are
subject special xxx
,

rules
of
CGT Net Book value will be
exempt from
.

gain CGT
✗✗✗
.

This
L
category can also
-

vehicles If G
include
exempt
cost
Remaining life cost DP both
'
some ✗ -

inventory Total above £6.000 then

asset
life are
,

normal CGT will be

IF
Rights of
assesed
an asset in this
E¥ less
- .

furniture normal than 60

category years
is a

asset no
capital
-

If either cost 01=2 DP

,

4 not that one is

allowances
any
an is

6.000 G other
Exempt asset
,
then above

normal CGT will be is below 6.000 then

special rule CGI will

assessed .

of
)
followed ( not
be in our course
 -

→Tess than 50T

_←
- -

E-
- -

JLNon-cnattel-wast.mg
-

Lease
Rights chattels
> Non
- -

DP =
57,000 >
43J 20J -2-3-5
- -
-

IF lease
rights are
of
more than 50
years ,
then
NBV (50,814) >
95.000 normal CGT assedl > Non
wasting DP 30,000
23g
=
✗ is .
=

cost (2%782) 49-651

gain Adjusted 50.000
6186
43g DP →
__
xxx ×

(xxx)
Cost
gain 2217 89.3541

gain
✓
xxx

-↳FastFg-
-
- -

Enon chattel
-

IF less than 50
DIP 63.000
49g -12g 5¥ lease
rightsused are
years DP 30,000
>

og
'
= = -

(6%204) then ( 15,625) → 50.000

wasting
NBV 89,000 NBU 10
37g NBV
> >
= ✗ is ✗

loss (4204 ) 14,375

49g Dp

NBU
xxx

( )
xxx
gain 32

xxx

gain
In case less than 50 income tax Premium Rec 30.000
of years
-
is .

also
charged property 21×110-1>+30.000%4%0-00
in income .

In order to avoid double taxation ,

lease ,

Premium Paid 50,000

adjustment percentages are used -
=
.

zy ✗ (32-1
)✗5°'°°°%!#
.

DP xxx ( 5938)
(☒ Total cost Adjustment -1-8 Remaining
19.03¥
lost →
Adjusted ✗
years ✗ 10

gain Adjustment igiotal years

✗ ✗^
-1
.

-1¥
 Principal Private Residence (PPR) period
2
,
following periods are also deemed
IF supported
of occupation ¥ they by
sells residence
- a
person his
principal are

at least
occupation of month
CGT
then it will be exempted from for Actual period of
-

occupied and
beforeperiod
that
portion in which he
property . one month one

Residence
-

Principal after
deemed .

Period occupation i 36 months absence due to

of any
- .
reason
,

Principal residence means residence which is Ii,

Any period absence due to overseas

declared
by
a
person
to tax
department as

employment
his main residence . iii , Four
years
absence due to
Employment
There is no size limit
of Principal residence 0¥ self
Employment
.
-
.

included
-

Empty land
upto 0.5 acres can be

For land Requirement deemed period waived

greater approval
after
APO is
in
principal residence
of
-

.
.

required tax
department employment
from if
is concerns are shown
any
.

of occupation that
-
Period means
period in which a

Period PPR
person occupied property of occupation relief
is
not available Business use
-
.
on

exemption will
types portion
be two Last 9 months
of
house
of
can : .

of occupation portion if
µ Actual Period be available on business use
persona

Deemed Period actually

of occupation portion for
that business
2,
occupied use
.

at least
-
9- month
during entire ownership period .

Actual Period
of occupation means
period in
-

that
property IF lets part of property
actually
out his
which
person occupies a
person
-

a .

then on that portion PPR will not be

Deemed Period
occupation assumed Rather called
of
means available a
relief Letting relief
-
.

at
period occupation A person is
actually will be available lower
of of
.

that £40.000
from property during
absent time .
1,

PPR
1
,
Nine months disposal of
beforeDeemed property 2,

gain relating
to
are treated as Period
of
3)
letting .

condition
occupation Only .
.

for
this
point
must have lived NO
letting relief available residence
¥
that whole
is a
person is
-

for
at least one month in
property during is let out
-

entire
ownership period .
 = : ⇐ -
-

-0 -

É
-__@
- - - --- -
- -

- - - - -

_⑤-
- -
- - →

A- - -
- - -

-
- -
- - - -
-

Exempt Comments
"m
APÉ= 14
Chargeable
I
may
1990
lJuly 1991
-

=
0
-

27m
1993 Absent 27m¥ Absent due to
July
-
l 1991 1 Oct . : = 0 no reason

12m
Absent 12m¥ Abroad
-

loot .
1993
"m
loot . 1994 :
-
=

>
0
Employment
1994 4mn 0 Absent due to
1 Oct 31
January 1995 Absent no reason
-

. : -

125m
-
1 Feb 1995. 30 June 2005 : APO :
125 0 -

" 5m
9¥
-
1
July 2005 1
February 2015 -
.
Absent 106 Absent due to job .

191m
-
106m
-

and
NI -
As it is
supported by
APO
beforebe after
•
% 36m due

to
any
reason
exemption can used .

and
Nz -
As it is
supported by
APO
before afterused
•
:
abroad
due to employment exemption can be .

and due
supported by APO
As it 36m

used after
NZ
before
-
is :

to exemption be
any
reason can .

NI -

Exemption due to job is not available as it is not

supported
by APO
after
Last 9 months
exemption
-
is available .

DP = 95.000

Cost (25.000)
70.000
chargeable
PPR gain (45,017 ) → 70,000 ✗ 191

24,983 1911-106
 1/5=20-1
=
.

- - - - -
-
-

- - - → -

- - -
- -

- ← -

-0
-
- -

- - - - -

-
- - - -

- - -
-
-

- - -
-

_@
Exempt
- - - -

30m
Chargeable
Exempt Chargeable
l
July 2003 1
January 2006=1001 APO 30
-
-
-

2006103
"m
-

1.4.1991 31.3.1993 = APO

__
24 0 -
l
January
31
July 2014 = 80-1 APO
.

9¥ -

66m 201 Business

- 1.4.1993 30.9.1998 Absent
-
36 30 >

75 19
102m 80%
APO 102 0 103-9=944 114 -
19 -

-
1.10.1998 31.3.2007 :
20%
-

96m
-
1.4.2007 31-32015 = AbsentNI 9 877

171 117 last 9m available residence

NI exemption is on whole
-

as business use
portion was also
occupied actually
As this
supported than lmonth entire ownership period
for
absence is 8
NI
by APO
before more in
-
.

: 36m due to
after
reason are
any
•

exempted
70.000
Chargeable gain
-

support deemed period PPR 70.000×114 (60,000 )

after
APO
of
NO
NI
-

.
-
=

1141-19
10.000
Last 9 months
exemption available
-

is .

194.800
Chargeable gain 171
PPR =
194,800 ✗
(115/663)
171-1117

79,137
Chargeable
now
 PAGE 151

E- -

= = -
=

÷ =
-
= -
-

= - -

- - - - -
-0
-
- - - → - - - _-

a-
- -
I f
- - - -

- -

- - - -
- - -

=_ -5
- - - - - -

=
 PAGE 152

✓ -

= I
I -_
 Sale Manchester
of
house in will
qualify
-

Private Residence
for Principal relief ,
as this house

was Demeter's main residence and he lived

it
in
during ownership period .

Evaluation
of to period of occupation Exempt chargeable
-
is : comments
24 APO
I
May 2008 I
May 2010=24 months 100% APO > 0 is
wholly exempt
-
-
=

701 9
to
before
31 Oct 2021=138 months APO 0 Last 9 months
I
may
2010 >
-

-
.
=

138-9=1 29m
30% letting 90 39
= disposal will be
wholly
123 39
exempt on whole

property as actual
On months due to done
chargeable
which arose
occupation was
-

lowery
at
letting letting
,

£40.000
relief
will be available
for whole
more than lmonth

Is in
property .

2 PPR 71,370 On
remaining
22,63J
= -

to 94.000
3)
gain relating letting months =
✗ 39 =
138m -9m -129m
,
70%

123+39
portion will be

due to
exempt APO

94.000 930%
Chargeable
will be
gain
- =

PPR= 94.000 (7-1,370) due to

-
✗ 123 =

chargeable
1231-39
letting .

(22.630)
letting relief
-
=

0
 PAGE 143

:÷÷÷÷_
-

- - -

- - - -
-
- -

÷ - . -

__ÉI_→E×¥÷E
I - - -
-

- -
.

E- - - -
-

- - - __

_ -
- - - -

-②
-

= __→_ =
 Rod (a)

DP= 20.000 ✗ £4 =
80,050
-
Cost -
20.000 ✗ £23 = (46,000)
20.000×9-26--1=233--6000 )¥
-

Benefit already taxed =

28.000
chargeable gain
-
Annual Exemption 42.300)
Taxable 15,700
gain
-
Tax =
15,700 ✗ lot . = 1570

-
Proceeds = 80.000

- Tax ( 1570)

tax proceeds 78.430

After

date £26
grant whereas
MV was exercise
NI - on
,

£23 £03
price
taxed
was . This
benefit
date
of
will

be on Exercise .
 PAGE 117

Section B – BOTH questions are compulsory and MUST be attempted

3 Amelia is a sole trader. She is seeking advice in respect of a loss incurred by her business, the tax implications of
-

= and deregistration for value added I

-

replacing
= a warehouse, tax (VAT) purposes.
Amelia:
-

– Has owned her unincorporated business, AS Trading, for many years.

- - -

– Has savings income of £6,000 each year.

-

– Had rental income of £11,600 from a UK residential property in the tax year 2019/20.
– Has no rental income in the tax year 2020/21 as the letting ceased on 31 March 2020.
– Sold this property on 30 April 2020.
AS Trading – tax adjusted trading profit/(loss):
£
Year ended 31 December 2019 30,000
Year ending 31 December 2020 (forecast) (14,000)
Amelia – recent capital disposals:
– Amelia’s capital disposals are as follows:
Asset Date of disposal (loss)/gain
£
Painting 1 June 2019 (11,000)
UK rental property 30 April 2020 45,000
Shares in Swartz Ltd 16 August 2020 28,000
– All of these disposals were made to unconnected persons.
– Amelia had never lived in the UK rental property.
– Swartz Ltd is an unquoted trading company.
– Amelia sold the whole of her 3% shareholding in Swartz Ltd.

0
Proposed sale of Warehouse 1:
-
– Amelia acquired Warehouse 1 on 1 May 2014 for £86,000.
-
- - - -
– Amelia will sell Warehouse 1 on 1 May 2021 for its expected market value at that date of £118,000.
- -
- - -
-

– AS Trading occupies three out of the four floors of Warehouse 1.

-_____
-

– The remaining floor has been rented to tenants throughout Amelia’s ownership of the building.
-

- -

-0
Proposed purchase of Warehouse 2:
– Amelia will purchase this warehouse, and a forklift truck for use in the warehouse, on 1 March 2021.

E. IFE 7--5 E←-_

– Amelia will pay £83,000 for Warehouse 2, and will pay £23,000 for the forklift truck.
-

– Amelia will start to use the whole of Warehouse 2 in her business from 1 May 2021.
AS Trading – taxable turnover for value added tax (VAT) purposes:
£
Year ended 31 December 2019 92,000
Year ending 31 December 2020 (forecast) 65,000
Year ending 31 December 2021 (forecast) 79,000
– Amelia expects that the taxable turnover of the business will continue to increase gradually in the next few years.
– AS Trading makes wholly standard-rated supplies.
– Amelia wishes to apply for voluntary deregistration for VAT purposes on 31 December 2020.

12
 PAGE 118

Required:
(a) (i) State the reliefs available to Amelia in respect of her trading loss of the year ending 31 December 2020,
on the assumption that Amelia does not wish to carry forward any of the loss. (3 marks)
(ii) Explain, with supporting calculations, how much tax would be saved for each of the reliefs identified in
requirement (a)(i). (8 marks)

(b) Explain, with supporting calculations, the capital gains tax and income tax implications for Amelia of the
=_-_
-

- -_
-

proposed sale of Warehouse 1, and the acquisition of Warehouse 2 and the forklift truck. (6 marks)

(c) Explain why Amelia can apply to voluntarily deregister for value added tax (VAT) purposes on 31 December
2020, from what date her VAT registration would be cancelled, and the immediate consequences for her of
deregistering. (3 marks)

(20 marks)

13 [P.T.O.
 Amelia

Sale Warehouse 1
of
Business use
portion Non Business use
portion
DP = 118,000×314 =
88.500 DP : 118,000×1/4 = 29,500
Cost . 86,000×314 = (64.5-00) Cost :
86,000×114=(2-1,500)
8000
chargeable gain 24.000
chargeable gain
-

(18*0) ( )
Deferral Deferral
-

5500
chargeable now
Chargeable
now 8000

Gain > No

of
Business
Deferral relief
-

use on

portion can

Rollover
be
deferred non business use

through portion
relief
as

proceeds of
warehouse I

were reinvested in warehous 2 within 12 months

before
the disposal .

Business proceeds warehouse 1 88.500

of
use
- =

Reinvestment Business portion 183.0003

in
of
-
use

Warehouse 2

Cash in hand 5,500

will lower
Chargeable now be
y
-

24.000
gain
l =

,
-
2
,
cash in hand = 5500

Gain 5.500 also

chargeable
can be
0g
- now

deferred through against used

Holdover
relief purchase
Forklift if Forklift
truck truck is in

0J business .
 PAGE 159

=-
÷
-

=
-

= =
-

-
-

E- = - - -

- - -
-

- - -
-

I
- -
- -
-

T
E-
-

-
-
Foo

E-snares-consid.IE
-
- f- -
a -

-
-
-

-
- - -
-

-0
E- I -3--5=-0 - - - - - -
 to
Enid Gain
chargeable
now on
transfer of business
-

Ltd
qualify for
(a) Enid it
qualify for incorporation
relief
-
will on
Niche will BADR as is a
,

to
transfer of business Niche Ltd sale business which ownership
of ongoing than
.
as in

following
conditions
satisfied period 2yeo.rs
:
are is more

og
.

transferred
business
d)
Ongoing
is

goodwill
to
assets
transferred
2, All BADR not available sale
of
are -
is on

consideration Close co

form
3, is in shares
of
.

Incorporation relief
will be available on 85%

Balance Account
portion of the
gain
as
only
85% -
in loan :
203,000 ✗
15=1 .
= 30,450

consideration CGT ( 1035)

form of
is in shares .
-

= 30 + 1005

29,415

to Ltd
CGT
transfer
business Niche
on
of
.
-

will be :

1
,
Goodwill
DP = MU =
83.000

Cost ( -

)
83.000
chargeable gain
Incorporation relief 85¥ (70.550)
12,450
chargeable
now

Annual Exemption (12.3¥

Taxable 150
gain
CGT 150 30
201
-
=
= ✗ .

workshop
2
,

DP = MV = 122,000

Cost (5-5.000)
67000
chargeable gain
Incorporation 85-1 (56-950)
relief
.

10.050
chargeable
now

Annual Exemption ( -

)
Taxable 10.050
gain
-
CGT = 10.050 ✗ 101 =
1,005

asset
3,
Inventory → No CGT .
It is
exempt .
 PAGE 200

T -
-
- - -
-

- - - -

-
-

-
-
- - -
- -

€- - -
-
- a-

-03¥ - -
- - - - - - -

-
_- e - - _ - -

.se#iE-E- :IEI-=- - - - - o- - - - - - - -
-8-5--7
-
-

-- ←-

→ _→_-

-0=-8 - - -
-0
F- 5--55-0=-0 -
 PAGE 201

-
-

EEE =
-
-

-
-

-
a s - -

-
-

-
- - -

- - -
- -

-
- -

E- -
-
- -

a -
-
-

-
-

- -

TO
-
- -

- a - - -
-

- - -
- -

5=-0
- -
-
-

-5
- -

-0
 Ray G Shanira (b) i
Gift of shares in Solaris

£92
pk working
Purchased
DP = MU = 7400 ✗ = 68.080 -
Shares in Beem plc = in June 2013

( 10.575 ) cost
Gift of Cost
House Heliosa 3700 at EEL
of
in
-
shares

✓
57.505
Chargeable gain
DP : mu = 360.000

Cost ( 280.000) Takeover October

by
Solaris
plc in 2019
-

and
Chargeable gain
80.000 -

Shania has
capital loss
of
8.000 an mu % Cost Alloc .

( ) Not
Gift relief qualifying exemption
7400 £89
fiscal year
12,300 65.860 10.575
Ordinary
→
Annual 21122 shares 81.61
-

of
:
✗

of 8.0001-12,300=29-3-9
a .
- : .

80.000 asset She £ "" °O°

=
14,800 18-4
chargeable
can

gainCGT Of
cash
realize
now -
-

Annual
Exemption (12,300 ) February-

2021 without
creating any
. go.gg, no , ,z .gg,

67.700 20/21
Taxable
gain
-

CGT 67,700 28% 18,956 Total Solaris

pk shares 57,505
gain
-
= ✗ : -
on :

Number shares 7400

of
-
= .

Further
required tax charged 7-7
information it per
about 57.505
gain
-
is -
share = =

in tleliosa as will be used to calculate 7400

,

Double Taxation
Relief
.

covered loss 4
Gain
through AE 20,300
-

- Tax will be due on 31

January 202--2
-

Shares which can be

gifted
:
20.300 = 2612 shares

77

Further
Gifts married should
gift
G Shania
Ray
Shanira will
get on
Painting 9 2612 shares
-

it
Gifts made will
17
September 2021 .

beforeat of
Solaris
pk before marriage
.

be CGT 5 be
chargeable for
will mu .

Gifts Remaining
CGTG 7400-261-2=4788
made it be
exempt from
shares should be
after
will -

cost liability
gifted notaftercreated
will be at so that CGT
marriage
.

is .

Gift of Painting 7,000

DP = MV =

Cost ( 15.000)
loss ( 8,000)
should
Painting be
gifted before marriage
-

before
17
September After marriage
it 2021 .
will

exempt transaction from

become 8 CGT loss

will not be allowed .

 PAGE 204

E- -

= =

E-= -
-

⇐¥-¥ →_•
-

4%-0
- - -
- -
-

_÷--0 - -

-
=D
EE -35--0--9 -

s E- -
 PAGE 205

✓
-_-_- ③
- -
 Eric (a)
=

of
Damage Painting
DP = MV = 10,000

Cost (95-83) →
46.000×10,000

chargeable gain 417 10.000+38.000

( 417)
Annual
Exemption -

Proceed = 10,000

- Tax ( -

)
tax
proceeds
10.000
After
shares
Disposal of Malaga pic ✓
DP 6.
= ooo shares ✗ £115 = 69,000

Cost (51¥ sister 12,000

Gift from
> -

shares

18.00 126.000
chargeable gain mug
shares
- =

12,300-417 (11,883) (24.000>

Gift Relief
Annual
Exemption
-
:
a

Taxable 6117 Base 102.000

gain
cost

102,0€ ✗
6,000=51.0--00
-
CGI 6117 ✗
2¥
.

=
12¥ 12,000

-
DP : MV -
. 126,000

Proceeds = 69.000 -
Cost 46.000)
( 1223) 30.000
Tax
chargeable gain
-

tax 80%(24*0)
Gift Relief
67,777
After proceeds .
 PAGE 33

ADVANCED TAXATION – 2020 / 21

Mr. A gifted 40,000 shares in ABC ltd an unquoted trading company to her niece on the occasion of
her marriage on 1st May 2019 when they worth £180,000. Mr. A had owned the share since 1997. On
gift date ABC ltd owned assets worth 500,000 which include investment property of £50,000. Mr. A

OWAIS MIRCHAWALA
had made no life time gift.
Compute IHT

Mr. A gifted shares worth 40,000 to his Son. Company owns following assets:
Business asset - 70,000
Excepted asset - 30,000
Compute PET.

Mr. X gifted shares worth 50,000 to his Son. Company owns following assets:
Business asset - 100,000
Excepted asset - 50,000
Compute PET.

Mr. A has transferred shares worth of 300,000 in a farming company value of company is as follows:
Value of farm & land 450,000
Other assets 150,000
600,000
Agriculture value of land = 400,000, Other Business assets worth 150,000. Compute transfer value
which is chargeable.

Mr. J has transferred shares worth of 500,000 in a farming company value of company’s farm & land
is 800,000. Agriculture value of land = 600,000, Other Business assets worth 250,000. Compute
transfer value which is chargeable.

Mr. A has following incomes

N/S taxable income 20,000
Taxable interest income 10,000
Taxable gain 29,400
Calculate tax.
 PAGE 34

ADVANCED TAXATION – 2020 / 21

Mr. A has following incomes

N/S taxable income 15,000
Taxable dividend income 5,000

OWAIS MIRCHAWALA
Taxable gain 30,000
Qualifying Donation = 6,400 (Net)
Calculate Tax?

Mr. A owns a property costing £100,000. He disposed part of it for £50,000 market value of remaining
property is £110,000. Later he sold remaining property for 250,000.
What is the gain?

Mr. A has 100 acre of Land costing £100,000. He Sold 1 acre for £10,000. Market value of entire land
£250,000. He made no other disposals during the year. Next year the remaining asset is sold for
240,000. Total gain through normal and small part disposal treatment?

Mr. J disposed part of land for £17,000 when value of remaining land was £250,000. Next year he sold
remaining for £340,000. Land cost £65,000. Total gain through normal and small part disposal
treatment?

Mr. N purchased an asset for $15,000 1st April, 1995 which was destroyed by fire on 31st July, 2019.
She received scrap proceed of $1,000. The asset was not insured. Tax implications:

Bill purchased an asset £25,000 on Oct, 1996 which was destroyed by fire on 30th September, 2019.
He received scrap proceed of £1,000 and compensation of £35,000 from his insurance Co. on 30th
September 2019. He purchased a replacement asset for £40,000 on 1st Feb, 2020. Tax implications:

Mr. A purchased an asset for 70,000. It was destroyed. An insurance proceed of 170,000 was received.
New asset was purchased for 150,000. Tax Implications

Mr. X purchased an asset for 20,000. It was destroyed by fire and insurance proceeds received were
27,000. He reinvested 22,000 for purchasing new asset. Calculate gain chargeable immediately.

Mr. A purchased an asset worth £50,000. Due to fire it was damaged and restoration cost of 7,000
was incurred. Capital Gain Tax implications?

Mr. A purchased an asset worth 100,000. The asset was damaged due to fire. Insurance Proceeds were
20,000 & the value of Asset in damaged condition was 110,000. He did not reinvest proceeds.
Calculate Capital Gain Tax?

Mr. A purchased an Asset worth 300,000. The asset was damaged due to fire and proceeds Received
were 80,000. The value of Asset in damaged condition was 400,000. He reinvested 120,000 proceeds
for Restoration. Calculate if gain is deferred and if not deferred.

Mr. A purchased an Asset worth 250,000. The asset was damaged due to fire and Insurance proceeds
Received were 65,000. The value of Asset in damaged condition was 295,000. He reinvested 63,700
proceeds for Restoration. Calculate base cost if gain is deferred.
 PAGE 35

ADVANCED TAXATION – 2020 / 21

Mr. J disposed of a plant for 140,000 on 1st January 2020, which he originally acquired for 85,000. He
reinvested the proceeds from disposal of this asset in a new land purchased for 170,000 on 15thMarch

OWAIS MIRCHAWALA
2020. Later he disposed Land for 450,000. Calculate CGT.

Mr. P disposed of a Machine for 90,000 on 15th July 2019, which he originally acquired for 25,000. He
reinvested the proceeds from disposal of this asset in a new land purchased for 70,000 on 15th March
2020. Later he disposed Land for 450,000. Calculate CGT.

Mr. J disposed of a plant for 35,000 on 20th June 2019, which he originally acquired for 5,000. He
reinvested the proceeds from disposal of this asset in a new land purchased for 7,000 on 15 th March
2020. Later he disposed Land for 50,000. Calculate CGT.

Mr. K has disposed of a land having cost of 450,000 and Disposal Proceed of 760,000. He used this
property 60% in Business. Later he purchased replacement asset for 650,000. Compute CGT.

Mr. J purchased Building X for 46,000 on 1st July 2019. It was used 55% for business purpose. Further
He disposed of Building D in December 2019 for 66,000 which he purchased for 28,000. Business use
of building D was 70%. Required: Chargeable gain

Mr. N purchased Building D for 96,000 (45% business use) on 1st May 2019. Further He disposed of
Building Z in November 2019 for 75,000 which he purchased for 38,000. Business use of Building X was
85%. Required: Chargeable gain

Mr. B disposed of a plant for 195,000 on 1st January 2020, which he originally acquired for 123,000.
He reinvested the proceeds from disposal of this asset in a new depreciable Plant purchased for
187,000 on 15th March 2020. Later he disposed Plant for 475,000. Calculate CGT.

Mr. A purchased land for 90,000 and disposed it for 130,000. Then he purchased depreciating asset
for 175,000 which was later disposed for 225,000. Compute Gain.

Mr. A purchased following shares of C Company on following dates:

1.1.2002 2000 shares for 4,000
1.1.2007 3000 shares for 8,000
1.1.2013 2000 shares for 19,900
He sold 4000 shares on 1.1.2020 for 40,000.
Required: calculate chargeable gain.

Mr. X purchased following shares of B Company on following dates:

01.1.2006 3000 shares for 9,000
01.1.2009 4500 shares for 12,000
01.1.2020 3000 shares for 27,000
15.1.2020 2500 shares for 21,000
He sold 8,000 shares on 1.1.2020 for 50,000. Compute Gain.

Mr. B purchased following shares of X Company on following dates:

01.1.2010 6000 shares for 19,000
01.1.2012 7500 shares for 22,000
01.1.2020 6000 shares for 37,000
 PAGE 36

ADVANCED TAXATION – 2020 / 21

15.1.2020 5500 shares for 41,000

He sold 18,000 shares on 1.1.2020 for 150,000.
Required: Calculate Chargeable Gain.

OWAIS MIRCHAWALA
Mr. A purchased 10,000 shares on 1.1.2002 for 20,000. On 1stJanuary 2007 Company offered a right
issue of 1 for 5 at IP of 3/shares. Mr. A exercised those rights. He sold 3000 shares for 12 per share on
1.1.2020. Compute chargeable gain.

Mr. T purchased made following transactions in Co J shares

- Purchased 12,000 shares @ 5 per share on 1 Jan 2005
- Got bonus issue of 2 for 5 on 15 Dec 2006
- Purchased 17,000 shares for 55,000
- Exercised Right Issue at 7 per share of one share against 2 shares held
- Disposed 27,000 shares for 13 per share
Compute CGT?

Mr. A purchased 12,000 shares in A ltd for 24,000. Later 1 for 5 right issue was made at 2.3 per share.
Value of share after right issue was 2.65 per share. Mr. A did not excise his rights and sold them for
6,000.

Mr. D purchased 15,000 shares in X ltd for £29,000 on 1st July 2008.
On 1st September 2009 Company made a bonus issue of 1 for 5.
On 1st November 2011 he purchased 2000 shares for £7,000.
On 1st October 2013Company announced right issue of 2 for 10 at exercise price of £2 / share. MV of
shares after right issue was 2.8.
He did not exercise his rights & sold them for £17,000.
Compute chargeable gains.

Mr. A purchased 15,000 shares in X ltd @ £35,000 on 13th August 2011. Later 1 for 2 right issue @
4.5/share was made; value of share after right issue was 4.2/share. Mr. A did not exercise right & sold
them for £1,500.
Compute gain

Mr. X purchased 24,000 shares in J ltd @ £74,000 on 13th August 2013. Later 1 for 8 right issue @
2.9/share was made; value of share after right issue was 4.2/share. Mr. J did not exercise right & sold
them for £ 3,600.
Compute gain if all possible elections are made.

Mr. A has following incomes:

Taxable N/S income 10,000
Taxable interest income 5,000
Chargeable gain eligible for Entrepreneur Relief 35,000
Chargeable gain not eligible for Entrepreneur Relief 20,000
Required: calculate tax.

Mr. X had following incomes:

Taxable N/S income £11,000
Taxable interest income £2,000
Chargeable gain eligible for Entrepreneur Relief 12,000
Chargeable gain not eligible for Entrepreneur Relief 25,000
Required: calculate tax.
 PAGE 37

ADVANCED TAXATION – 2020 / 21

Mr. A purchased 15,000 shares in J Plc at $3/share in 1998. In 2008 J Plc was acquired by A Ltd and it
gives:
MV

OWAIS MIRCHAWALA
5 ordinary share $3
3 preference share $1.5
Cash $2
1 QCB $2
Per 2 shares of J Plc
Later in 2019 Mr. A sold 10,000 ordinary shares at $30. CGT implications.

Mr. A purchased 10,000 shares in Round House plc for $20,000. Round house plc was taken over by N
Plc and consideration was 1 ordinary share whose MV is 2.8, 1 Qualifying Corporate bond whose
market value was 1.2 of N Plc and cash was $4 per 1 share of Round House. Required CGT

Mr. X purchased 18,000 shares in Alpha Ltd at $7/share in 1998. In 2008 Alpha Ltd was acquired by
Mary Plc.
Mr. X receives:
MV
12,000 ordinary share $6
Cash $9,000
16,000 QCB $8
Later in 2019 Mr. X sold 9,000 ordinary shares at $20 and 2000 QCB of Mary Plc at $12. CGT
implications.

Mr. N purchased 28,000 shares in J Ltd at $9/share in 1999. In 2008 J Ltd was acquired by Justin Plc.
Mr. N receives:

22,000 ordinary share $7

Cash $18,000
26,000 QCB $8
Later in 2019 Mr. N sold 15,000 ordinary shares at $22 and 8000 QCB of Justin Plc at $15. CGT
implications.

Mr. D disposed 5,000 shares in Co. J for 22 per share on 1st July 2019. He purchased 4,000 shares in
Company X for 3 per share in 2003. In 2009 Company X was taken over by Company J which gave Cash
of 3,500; 2 ordinary shares worth 4 and qualifying corporate bond worth 3 per share of company X.
Calculate CGT of 19/20 assuming that Mr. D has always made elections to defer gain.
 PAGE 38

ADVANCED TAXATION – 2020 / 21

Mr. J owns 35,000 shares at 3.5 per share in J plc since last several years. He has been an employee in
J plc from the date he purchased shares. J plc has total 500,000 shares.
On 1 June 2015 He was offered for a Takeover transaction by X plc according to which 2 new ordinary

OWAIS MIRCHAWALA
shares in X plc will be allotted for every 1 share of J plc when Market value of X plc share is 6 per share.
X plc has total 8 million shares. Mr. J is not an employee of X plc. Later he sold X plc shares for 9.5 per
share. Compute tax on assumption that all beneficial elections are made. Mr. J is higher rate tax payer

Mr. J gifted an asset having Market value of 77,000 to his Son for free. He has purchased this asset for
47,000. Compute Capital Gain / loss.

Mr. J gifted an asset having Market value of 63,000 to his Son for free. He has purchased this asset for
38,000. Compute Capital Gain / loss.

Mr. N gifted an asset having Market value of 176,000 to his Son for 46,000. He has purchased this
asset for 39,000. Compute Capital Gain / loss.

Mr. N gifted an asset having Market value of 86,000 to his Son for 56,000. He has purchased this asset
for 39,000. Compute Capital Gain / loss.

Mr. K gifted an asset having Market value of 96,000 to his Son. He has purchased this asset for 27,000.
Mr. K wants to utilize his brought forward losses of 4,000 and Annual Exemption. Compute Capital
Gain / loss.

Mr. P gifted an asset having Market value of 83,000 to his Daughter. He has purchased this asset for
34,000. Mr. K wants to utilize his brought forward losses of 7,000 and Annual Exemption. Compute
Capital Gain / loss.

Mr. B gifted shares of an unquoted Company having Market value of 179,000 to his Son. He has
purchased these shares for 63,000. The company had business assets worth 400,000 and non business
assets of 150,000.
Compute Capital Gain / loss.

Mr. Y gifted shares of a quoted Company having Market value of 244,000 to his Son. He has purchased
these shares for 122,000. The company had total assets of 900,000 out of which non business assets
worth 150,000.
Compute Capital Gain / loss.

Father gifted his business costing 100,000 to his Son. MV of the business is 500,000. Later Son sold the
business after 6 months for 600,000. Father had run the business for 3 years.
Whether to opt Gift Relief OR not?

Mr. A gifted business to his son at MV of 600,000 and cost of 250,000. Later his son sold business
for 900,000. Both father and son operated business for 5 years each. CGT beneficial implications.
 PAGE 39

ADVANCED TAXATION – 2020 / 21

Mr. A transferred his sole trader business in to Company on which gain was 50,000. Total Market Value
of Business was 140,000 and whole consideration was in form of shares. Later he sold shares for

OWAIS MIRCHAWALA
320,000
Compute Gain?

Mr. B transferred his sole trader business in to Company on which gain was 75,000. Total Market Value
of Business was 195,000 and whole consideration was in form of shares. Later shares were sold for
225,000
Compute Gain?

Mr. D sold shares of a company for 92,000. These shares were received when he converted his sole
trader business in to a company 5 years ago. At the time of incorporating company total MV of
business was 52,000 out of which shares consideration was 38,000. Calculate gain on disposal of
shares.

Mr. K incorporated his sole trader business in to a company in 2012. MV of business at the time of
incorporation was 300,000 and he took shares of 250,000. Later he sold shares in 2019 for 320,000.
Calculate CGT on disposal of shares.

Mr. A transferred his business with Market Value of 100,000 and Cost of 50,000. He has B/f losses of
7,400 and whole unused Annual exemption. He wants to use his Annual Exemption and B/f Losses,
Compute Base cost of shares.

Mr. A transferred his business with Market Value of 200,000 and Cost of 30,000. He has B/f losses of
14,000 and whole unused Annual exemption. He wants to use his Annual Exemption and B/f Losses,
Compute Base cost of shares.

Mr. A transferred his business on July 2018 to Company when market value of business was 500,000
and cost was 240,000. Mr. A received 100% consideration in form of shares. He sold the shares on
5thMay 2019 for 680,000. His taxable income for 19/20 is 50,000 and the business was being run for
several years.
Whether to opt Incorporation Relief OR not?

Mr. J incorporated his business in to a Company having Market value of 270,000 and cost of 45,000.
Later he disposed the shares for 400,000 in May 2015. Company was incorporated on September
2014. He has been running Sole trader business since last several years. Required: Tax on the
assumption that all beneficial elections will be made.

Mr. A acquired 32 years lease in March 1998 for a premium of 50,000. He sold lease for 30,000 on
March 2020.
Percentage for 10 years = 49.65%
Percentage for 32 years = 89.354%
Calculate Capital Gain Tax.

Mr. J disposed a lease on 1st Jan, 2020 for 90,000.

Expiry date of Lease is 13th June, 2026
 PAGE 40

ADVANCED TAXATION – 2020 / 21

Lease was acquired for 65,000 in 1st June, 2000.

Lease % are:
26 years = 48.116%
6 years = 13.661%

OWAIS MIRCHAWALA
7 years= 14.885%

On 30 June 2019 Miss Wolf assigned the lease of a building originally acquired as an investment for
$30,750; the lease expires on 30 June 2034. She had acquired the lease for $8,000 on 1 January 2011
and the building had never been her principal private residence. You may assume that the relevant
percentages from the lease percentage table are as follows:
16 years $64,116
23 years $79,622
24 years $81,100
Required
Calculate the gain or loss on the assignment

Mr. A purchased copyrights for 95,000 for 43 years. Later after twenty years he disposed it for 57,000.
Gain?

Mr. A purchased copyrights for 89,000 for 49 years. Later after twelve years he disposed it for 63,000.
Gain?

- On 1 may 1990 Mr. Flint purchased a house in Southampton for £25,000 in which he lived in
until he moved to a rented flat on 1 July 1991.
- He remained in the flat until 1 October 1993 when he accepted a year secondment to his firms
New York office. He returned to the UK on 1 October 1994 and moved into a relative house,
where he stayed until he returned to his own home on 31 January 1995.
- On 1 July 2005 he changed jobs and rented a flat near his new Employer’s offices in Newcastle.
Here he remained until he sold his Southampton house on 1 February 2015 for £95,000.

Mr. Dearden bought a house on 1 April 1991. Occupation of the house has been as follows:
01.04.1991-31.03.1993 Lived in the house as his PPR
01.04.1993-30.09.1998 Travels the world and lets the house.
01.10.1998-31.03.2007 Lived in the house as his PPR.
01.04.2007-31.03.2015 House was left empty.

On 31 March 2015 Mr. Dearden sold the house realizing a gain before relief of £194,800.

On 31 July 2014 Alex sold his house for £125,000, resulting in a capital gain of £70,000. The house had
been purchased on 1 July 2003, and one of the five room had been used for business purposes
from 1 January2006 to the date of sale. Calculate the chargeable gain arising on the sale of the
house.
 PAGE 41

ADVANCED TAXATION – 2020 / 21

Mr. Fox bought a hose on 1 August 1990 for $50,000. He lived in the house until 31 July 1993. He then
went abroad to work as a self-employed engineer until 31 July 1998. Mr Fox went back to live in the

OWAIS MIRCHAWALA
house until 31 January 2004. He then moved to with his sister. Mr. Fox sold the house on 31 July 2011
for $180,000. Compute tax

Mr. A has following incomes

- UK Income 35,000
- Overseas Income 60,000
He is resident in UK since last 9 years.
Advise whether to opt for Remittance basis OR not if he wants to Remit 17,000 to UK.

Mr. A inherited a foreign property from his Father which will generate Rental Income of 70,000 per
year. Mr. A is an additional rate tax payer. Advise whether he should go for arising basis OR opt
Remittance Basis if he has been resident for 13 years within UK.

Your manager has had a meeting with Brad, a client of your firm. Extracts from your manager’s
meeting notes together with an email from your manager are set out below.
Extracts from meeting notes
Personal details
Brad is 69 years old. He is married to Laura and they have a daughter, Dani, who is 38 years old.
Brad had lived in the UK for the whole of his life until he moved with his wife to the country of Keirinia
on 1 January 2010. He returned to live permanently in the UK on 30 April 2013. Whilst living in Keirinia,
Brad was non-UK resident and non-ordinarily resident. He is now resident and ordinarily resident in
the UK. He has always been domiciled in the UK. Brad has significant investment income and has been
a higher rate taxpayer for many years.
Capital gains
Whilst living in the country of Keirinia, Brad sold various assets as set out below. He has not made any
other disposals since 5 April 2009.

Quoted shares 1 February 2010 18,900 1 October 2008 14,000

Painting 1 June 2012 36,000 1 May 2008 15,000

Antique bed 1 March 2013 9,400 1 March 2010 7,300

Motor car 1 April 2013 11,000 1 February 2009 8,500

I explained that, although Brad was non-UK resident and non-ordinarily resident whilst living in
Keirinia, these disposals may still be subject to UK capital gains tax because he will be regarded as only
temporarily non-UK resident. There is no capital gains tax in the country of Keirinia.

Required:
An explanation, with supporting calculations, of the UK capital gains tax liability in respect of the
disposals made by Brad whilst living in the country of Keirinia. Your explanation should include the
precise reasons for Brad being regarded as only temporarily non-UK resident and a statement of when
the tax was/will be payable.