Questions and Answers of Taxation of Individuals

In October 2014, Jackie bought a chattel for £3,500. In October 2020 she sells a one-third interest in this chattel for £2,000. Compute the chargeable gain if the market value of the remaining
Andrew acquired a set of six dining chairs in January 2013 for £1,300. In March 2020 he sold three of the chairs to a friend for £5,200 (the other three chairs also being valued at £5,200 at that
An item of movable plant and machinery is bought in February 2018 for £8,000 and used solely for trade purposes. Capital allowances are available. Compute the chargeable gain or allowable loss which
In January 2011, Fiona acquired a 25-year copyright at a cost of £30,000. In January 2021 she sold the copyright for £35,500. Compute the chargeable gain.
On 31 March 1980, Philip acquired a 48-year copyright at a cost of £85,000. The copyright was valued at £92,000 on 31 March 1982. On 31 March 2021, Philip sold the copyright for £47,000. Compute
In August 2014, Jim acquired a 99-year lease on a flat for £170,000. In August 2020, he assigned the lease to Shirley for £212,000. The flat was never Jim's residence. Compute the chargeable gain.
Jean acquired a 30-year lease on a property in July 2010 for £132,000. In July 2020 she assigned the lease to Lawrence for £145,000. The property was never Jean's residence.Compute the chargeable
On 31 May 1981, Joan acquired a 45-year lease on a property for £38,000. The market value of the lease on 31 March 1982 was £35,000. Enhancement expenditure of £12,500 was incurred on 31 May 1991.
Jeffrey acquired a freehold property in October 2012 for £299,000. In July 2020 he granted Jill a lease on the property for £260,000. The market value of the freehold after the lease had been
In September 2014, Joanna acquired a 15-year lease on a property for £45,000. In September 2020 she granted a four-year sub-lease to Dean for £20,000. The property was never Joanna's residence.
In October 2020 Keith sells an antique cabinet for £7,200. He incurs incidental costs of disposal amounting to £200. The cabinet cost Keith £2,300 in July 2012. Compute the chargeable gain.
In September 2020 Kevin sells a drawing for £2,000. He bought the drawing in February 2014 for £50,000 when it was thought (incorrectly) to be by a famous artist. Compute the allowable loss.
In January 2021 Karl sells a one-quarter interest in a chattel for £2,500. On the date of this sale, the remaining three-quarters interest is valued at £8,500. The chattel had cost Karl £3,850 in
In January 2018 Katrina buys an item of movable plant and machinery for use in her business. The plant costs her £50,000 and capital allowances are claimed. Compute the chargeable gain arising in
In June 2018 Katie acquired a 5-year option to buy a piece of land. The option cost her £10,000. In June 2020 she sold the option for £8,000. Compute the chargeable gain.
Katherine acquired a 40-year lease on a property on 31 August 2002 for £75,000. On 31 August 2020 she assigned the lease to Francesco for £97,500. The property was never Katherine's residence.
In March 2013, Sean acquired a pair of matching antique silver candlesticks at a cost of £4,000. In August 2020 he sold one of the candlesticks to James for £6,750. At that time the other
On 31 March 1981, Estelle acquired a patent with a 45-year life at a cost of £21,000. The patent was valued at £22,000 on 31 March 1982 and Estelle sold the patent on 31 March 2021 for £13,000.
In May 2012, Edward paid £350,000 to buy a 20-year lease on a flat. In November 2020 he granted a 5-year sub-lease on the flat to Petronella for £150,000. The flat was never Edward's principal
Paul made the following acquisitions and disposals of ordinary shares in Crimmon plc:No further shares were acquired during 2020. Against which acquisitions will each of the above disposals be
Pauline makes the following purchases of preference shares in Bassoon plc:The shares had a market value of £2 per share on 31 March 1982. There were no disposals on or before 8 July 2020. Show
Paula makes the following acquisitions of ordinary shares in Indigent plc:She sells 500 shares on 28 March 2021. No shares are acquired within the next 30 days.(a) Show the s104 holding on 28 March
Sherjeel made the following acquisitions of ordinary shares in Truculence plc:On 1 September 2016, the company made a 1 for 10 bonus issue. Calculate the chargeable gain arising on 1 March 2021 when
On 13 May 2014, Ruben acquired 400 shares in Xantan Ltd at a cost of £1,800. On 17 July 2020, the company made a 1 for 8 bonus issue and (on the same day) Ruben sold his bonus shares for £7 each.
Tina made the following acquisitions of ordinary shares in Hombus plc:On 1 June 2016, the company made a 1 for 20 rights issue at £8 per share and Tina decided to buy the shares to which she was
In March 2014, Vincent bought 10,000 ordinary shares in Apezium plc for £44,000. In June 2020, the company went into liquidation and Vincent received a first distribution of £0.50 per share. The
In April 2016, Vanessa bought 100 shares in Entagon plc at a cost of £5 per share. The company went into liquidation and Vanessa received a first distribution of 40p per share in July 2020. The
In August 2013, Winston bought 8,000 shares in Hexico plc for £24,000. In October 2020 Zardac plc made a takeover bid for Hexico plc, offering the Hexico shareholders three shares in Zardac plus £1
In June 2015, Darren bought 1,000 ordinary shares in Cubson plc for £8,400. In November 2020, Phere plc made a takeover bid for Cubson plc, offering two ordinary shares and one preference share in
A taxpayer makes the following acquisitions of preference shares in Muvex Ltd:No further shares are acquired during 2020 or 2021. How will the following disposals be matched against these
Sandra acquired the following ordinary shares in Pincer plc:On 26 June 2020, Sandra sold 700 of her shares in Pincer plc. Assuming that she acquired no further shares in the company during 2020,
Jeremy acquired the following ordinary shares in Scarlon plc:He made no further acquisitions during 2021. On 22 December 2020, he sold 10,000 shares in the company for £10 per share. Calculate the
William made the following acquisitions of preference shares in Pangol plc:In January 2020, the company made a 1 for 4 bonus issue. In February 2021, William sold 450 shares for £4 per share.
Yvonne made the following acquisitions of ordinary shares in Ranghi plc:In January 2020, the company made a 1 for 5 rights issue at £1 per share and Yvonne decided to buy the shares which she was
(a) In November 2009, Yorick bought 6,000 ordinary shares in Togon plc for £30,000. In March 2021, the company went into liquidation and Yorick received a first distribution of £1 per share. The
In June 2019, Walter bought 10,000 shares in Ovod plc at a cost of £7 per share. In September 2020, Rundico plc made a takeover bid for Ovod plc, offering the Ovod shareholders eight Rundico shares
Suzanne acquired the following ordinary shares in Quarine plc:She made no further acquisitions and the shares were valued at £3.20 each on 31 March 1982. On 24 July 2020, Suzanne sold 1,200 shares
Saeed made the following purchases of ordinary shares in Hyban plc:In June 2017, the company made a 1 for 20 rights issue at £1.50 per share and Saeed took up the shares which he was
Susan made the following purchases of ordinary shares in Semicycle plc:In January 2021, the company went into liquidation and Susan received a first distribution of £2 per share. The market value of
On 9 May 2012, Steven bought 2,000 ordinary shares in Vexacon plc for £8,000. On 28 November 2016, he bought 500 ordinary shares in the company for £2,500.In March 2021, Danshore plc made a
On 1 April 1989, Allan bought a house for £29,000. He lived in the house until 31 October 2018 when he bought another house and made this his principal private residence. The house he had bought in
On 1 June 1998, Alice bought a house in Derby for £45,000.- She occupied the house as her PPR until 1 May 2000 when she left to work in Exeter, living in rented accommodation.- She returned to the
In relation to the previous example in this chapter, assume now that Alice always let her Derby house when she was not resident there. Compute the chargeable gain.
Alistair bought a house on 1 April 2000 for £125,000 and occupied the entire house as his principal private residence until 1 November 2008. As from that date, he rented out two rooms (comprising
Ava bought a house on 1 July 2000 for £62,000. She occupied the entire property as her PPR until 1 August 2007 when she began using one-quarter of the house for business purposes. This continued
Melanie bought a house on 1 September 1989 for £31,000. The house was sold on 31 December 2020 for £173,000. Compute the chargeable gain arising in each of the following cases:(a) Melanie occupied
Rupert bought a house in Manchester on 1 November 1998 for £75,000. He occupied the house as his principal private residence until 1 November 2002 when he left to work abroad for a year, living in
Samantha bought a house for £47,500 on 1 August 1999 and occupied the house as her principal private residence. On 1 June 2001 she began to use one-fifth of the house for business purposes.
Terry bought a house for £65,000 on 1 October 2000 and occupied the house as his principal private residence. He lived in the house until 1 October 2006 when he went to stay with relatives in
In July 2014, Laura bought an oil painting for £120,000. In October 2020, the painting was damaged by fire. In February 2021, Laura received compensation from her insurance company of £30,000.
Maurice bought an item of jewellery in November 2015 for £125,000. In 2020 the jewellery was stolen. As a result, Maurice's insurance company paid him £141,500 in May 2020. In June 2020 he spent
In May 2009, Janine bought a building for £187,525 for use in her business. In July 2020 she sold the building for £260,000 and, in the same month, bought another building for use in her business.
In June 2020, Ian sold a freehold building for £200,000, realising a chargeable gain of £25,000. The building had been used only for trade purposes. In July 2020, he acquired fixed plant and
Imagine now that Ian (in the above example) buys another freehold building for business use in November 2023 and elects to transfer the held-over gain on the fixed plant and machinery to the new
In March 2021, Jonathan gives a business asset to his daughter. Jonathan acquired the asset for £25,000 in May 2015 and its market value on the date of the gift is £60,000. Both Jonathan and his
In August 2010, Kathy paid £60,000 to acquire 90% of the ordinary shares of an unlisted trading company. In May 2018, she gave all of the shares to her son and both Kathy and her son elected that
In November 2020, Leroy transfers his business to a limited company in exchange for £50,000 in cash and shares which are valued at £600,000. The gain arising on the transfer is £260,000. Leroy
Three taxpayers each wish to make a BADR claim in relation to a qualifying disposal made during 2020-21. Their previous claims are as follows:(a) Gemma made a BADR claim in relation to a gain of
Calculate the CGT payable in respect of the following disposals, assuming in each case that the annual exemption is fully utilised against other gains, that there are no allowable losses other than
In October 2009, Matthew bought a piece of rare porcelain for £10,000. The porcelain was damaged in early 2016 and in February of that year Matthew spent £3,850 on restoration work. In July 2016,
In February 2011, Maria bought a diamond necklace for £13,500. In 2014 the necklace was stolen and, as a result, an insurance payment of £14,000 was received in February 2015. In the same month,
In June 2012, Pamela bought a freehold building for business use costing £150,000. In July 2020 she sold this building for £261,400 and immediately bought another freehold building, again for
In August 2020, Susannah (a sole trader) gave a business asset to her son. The asset had been bought by Susannah for £91,500 in July 2010 and enhanced in May 2012 at a cost of £34,500. The asset's
In January 1981, Norman bought a freehold building for use in his business at a cost of £120,000. The building had a market value on 31 March 1982 of £125,000. In June 2015 he sold the building for
In May 2015, Ruth sold a freehold building which she had used exclusively for business purposes. The building was sold for £220,000, realising a chargeable gain of £42,500. In the following month,
Calculate the CGT payable in relation to each of the following disposals, assuming in each case that the annual exemption is fully utilised against other gains, that there are no allowable losses and
In 2013, Shaun bought 20% of the ordinary shares of an unlisted trading company. The shares cost £140,000. He owned the shares until January 2021 when he gave all the shares to a friend. On the date
Mick Stone disposed of the following assets during tax year 2020-21:(1) On 19 May 2020, Mick sold a freehold warehouse for £522,000. This warehouse was purchased on 6 August 2008 for £258,000, and
Yvonne had the following transactions in the shares of Scotia plc:You are required to:(a) Calculate Yvonne's chargeable gain.(b) Calculate Sally's CGT liability for 2020-21, assuming that her taxable
In August 2020, Samuel sold 20,000 ordinary shares in WQZ Ltd for £8 each. He had bought shares in the company as follows:WQZ Ltd is an unlisted trading company with an issued share capital
In the year to 5 April 2021, Thomas More made the following disposals:(i) A flat in a house that he had purchased on 1 December 2010 for £80,000. It had never been occupied as the main residence and
On 30 June 2020 Jorge sold a house for £308,000. The house had been purchased on 1 January 2003 for £98,000 and used by Jorge as follows:Jorge let the house during all of his periods of absence.
You have been consulted by Mr Christopher Rodrigues on two matters relating to capital gains tax. Extracts from his letter to you are: "On 31 January 2021, I sold my shares in Fledgeby plc, a listed
On 1 May 2006, Nigel acquired a 30-year lease for £20,000. He assigned the lease on 1 November 2020 for £75,000.Kay purchased land in February 2012 for £20,000. She sold one-third of the land for
Gillian purchased 10,000 ordinary shares in Downtown plc in January 2015 for £20,000.In October 2020, Upmarket plc acquired the whole of the share capital of Downtown plc following a take-over bid.
Joan has been a full-time director of Sunnybank Pursuits Ltd (a trading company) since 2001 and has owned 10% of the company's ordinary shares since 2002. She retired in February 2021 and gave all of
Identify the accounting periods which relate to the following periods of account:(a) Company A prepares accounts for the year to 31 December 2020.(b) Company B prepares accounts for the six months to
A company's income statement for the year to 31 December 2020 is as follows:Compute the company's trading income (before deduction of capital allowances) for the year to 31 December 2020. Turnover
After deducting capital allowances for the year to 31 December 2019, the tax written down values of a company's plant and machinery were as follows:Calculate the capital allowances available for the
A company prepares accounts to 31 December each year and lets two properties to tenants.The following information relates to the year to 31 December 2020:(a) Property A is owned by the company. The
A manufacturing company has the following results for the year to 31 March 2021:The following information is also relevant:(a) Bank interest of £1,100 was owing to the company at the end of the
A company produces the following income statement for the year to 31 March 2021:Notes:1. The property was let on 1 January 2021 at a rent of £20,000 per annum, payable annually in advance. The
A company makes up accounts for the 21 months to 30 September 2020. The company's results for this period of account are as follows:The loan interest receivable relates to a £12,000 loan made on 1
Identify the accounting periods relating to the following periods of account:(a) year to 30 November 2020 (b) 1 October 2019 to 31 July 2020(c) 1 January 2021 to 31 January 2021 (d) 33 months to 31
On 1 January 2021, a company receives gross debenture interest of £1,600 from another UK company and pays net debenture interest of £8,640 to individuals. Explain the corporation tax treatment of
During the year to 31 March 2021, a company which qualifies as medium-sized spends £180,000 on research and development. This is qualifying expenditure under the R&D tax relief scheme. Explain the
A company's accounts for the 17 months to 30 June 2020 include:The debentures were acquired (not for trade purposes) on 1 May 2019. Interest is payable half-yearly on 30 April and 31 October. Show
A company has the following results for the year to 31 March 2021:The charitable covenant began on 1 October 2020 and falls within the Gift Aid scheme.Compute the taxable total profits for the year.
A company's income statement for the year to 31 March 2021 is as follows:Notes:1. The company acquired £240,000 of 10% debentures (for non-trade purposes) on 1 January 2021. Interest is receivable
A company bought a chargeable asset (not a chattel) in June 2003 (RPI 181.3) for £1,200. The asset was sold in August 2020 for £5,350. The RPI for December 2017 was 278.1. Compute the chargeable
A company bought a chargeable asset in November 2000 for £15,000. Enhancement expenditure was £2,000 in January 2002, £3,000 in June 2006 and £4,500 in September 2018. The asset was sold in
A company acquired a chargeable asset for £5,000 in February 2004 (RPI 183.8). The asset (not a chattel) was sold in January 2021. The RPI for December 2017 was 278.1. Compute the chargeable gain or
A company acquired a chargeable asset for £2,000 in April 1980 and sold the asset for £22,500 in September 2020. Compute the unindexed gain arising on this disposal if the market value of the asset
Calculate the chargeable gain arising on the disposal described in the above example. RPIs are 79.44 for March 1982 and 278.1 for December 2017.Data from Above example.A company acquired a chargeable
A company acquired a chargeable asset (not a chattel) in 1979. The asset was sold in December 2020 for £2,800. Compute the chargeable gain or allowable loss if the original cost of the asset and its
A company makes the following acquisitions of ordinary shares in JKL plc:The company sells 500 shares on 8 July 2020.(a) Calculate the cost and indexed cost of the s104 holding on 8 July 2020, just
A company made the following acquisitions of ordinary shares in CDE plc:The shares had a market value of £1.80 per share on 31 March 1982 (RPI 79.44). The company made no further acquisitions and
A company made the following acquisitions of ordinary shares in Rujan plc:The market value of the shares on 31 March 1982 (RPI 79.44) was £2.50 each. In June 2004 (RPI 186.8), Rujan plc made a 1 for
A company made the following disposals during the year to 31 March 2021:(a) A factory building was sold for £650,000 on 13 June 2020. This building had cost £300,000 in August 2000 (RPI 170.5) and
PCC Ltd is a manufacturing company which prepares accounts to 31 December each year.The company made the following disposals of chargeable assets in the year to 31 December 2020:(i) On 12 September

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