Candle plc (Candle) prepares accounts to 31 January. During the year ended 31 January 2021 it made the following disposals.

i. In April 2020 Candle sold a car for £4,000. The car was acquired for £22,000 in January 2017.

ii. In July 2020 Candle sold 180 shares in Snooze plc for £165 per share. The shares in Snooze plc were acquired as follows:

• June 1994 – purchased 180 shares for £18,000

• July 1997 – purchased 300 shares for £27,000

• January 2003 – Snooze plc undertook a 1 for 20 rights issue at £70 per share and Candle bought all the shares to which it was entitled.

• December 2014 – purchased 100 shares for £7,800

iii. In August 2020 Candle sold 500 shares in Green plc for £20.50 per share. Candle had bought 1,000 shares in Green plc in August 2019 for £5 per share.

iv. In August 2020 Candle sold an antique desk which was situated in the boardroom for £72,000. It was acquired for £20,000 in January 1980 and had a market value of £16,500 in March 1982.

v. Candle sold a building that was used for business purposes in November 2020 for £455,000. It had acquired the building in February 2014 for £210,000 and later converted the basement into a room at a cost of £87,000 in January 2017.

Required:

a) Calculate the chargeable gains (if any) arising in respect of each of the disposals made by Candle during the year ended 31 January 2021.

b) Explain the differences between the taxation of chargeable gains for individuals and for companies

Answer rating: 100% (QA)

a Calculation of chargeable gains by Candle Plc for the year ended 31st January 2021 I Sale of the c... View the full answer