Tx notes fa22 Final

June 2023 to March 2024 exams
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Answer to Example 10
 
 
 
 
(a)
Antique table
– this is an exempt asset as cost and proceeds are both 
≤
£6,000 and it is a non 
wasting chattel.
(b)
Painting 
– non wasting chattel
Normal calculation
Restricted to 5/3 [10,000 – 6,000] = 
£6,667
(c)
Antique vase
– non wasting chattel
(d)
The 
 
vintage car is exempt 
Answer to Example 11
 
 
£
Disposal proceeds
10,000
Cost
(2,000)
Chargeable gain
8,000
£
Disposal proceeds (deemed)
6,000
Less cost
(8,000)
Capital loss
(2,000)
£
Asset (1)
–
Asset (2)
6,667
Asset (3)
(2,000)
Asset (4)
–
Net chargeable Gain
4,667
£
£
Proceeds
38,000
Less Acquisition cost
Purchase
25,000
Less 12/30 
×
[25,000 – 1,000]
(9,600)
(15,400)
Chargeable gain
22,600

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Chapter 13
 
 
Answer to Example 1 
(a)
Match with acquisitions on same day as sale
none
(a)
Match with acquisitions in next 30 days 200 shares
(e)
Match with share pool - remaining 800 shares
7 July 2022
£
£
Disposal proceeds (200/1,000 
×
£25,000)
5,000
Less: cost
(4,000)
Capital gain for next 30 days
1,000
Number
Cost
31 May 2017
1,500
20,000
30 June 2018
500
10,000
2,000
30,000
Disposal
(800) (12,000)
1,200
18,000
Calculate Gain
£
Disposal proceeds (800/1,000 
×
£25,000)
20,000
Less: cost
(12,000)
Capital gain from the pool
8,000
Capital Gains in Total
9,000

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Answer to Example 2
 
 
 
 
(a)
Match with acquisitions on same day
none
(b)
Match with acquisitions in next 30 days
none
(c)
Match with share pool
Calculate Gain 
Answer to Example 3 
(a)
Match with acquisitions on same day
none
(b)
Match with acquisitions in next 30 days
none
(c)
Match with share pool
Calculate Gain 
Number
Cost
Feb 2018
7,000
15,000
June 2018
1,000
4,000
8,000
19,000
July 2018 Bonus 1:5
1,600
–
9,600
19,000
October 2022 Disposal
(5,000)
(9,896)
4,600
9,104
£
Disposal proceeds
20,000
Less: cost
(9,896)
Capital gain
10,104
Number
Cost
Feb 2018
6,000
15,000
June 2018
900
2,700
6,900
17,700
July 2018 Rights 1: 3 @ £3.00
2,300
6,900
9,200
24,600
September 2022 Disposal
(6,000)
(16,043)
3,200
8,557
£
Disposal proceeds
24,000
Less: cost
(16,043)
Capital gain
7,957

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Answer to Example 4
 
Working 1: 
Cost of ordinary shares in Gold Ltd
As Mark received both ordinary and preference shares in Gold the cost of his shares in Silver 
(£12,000) is divided between his new shareholdings in Gold according to the market values of the 
shares received.
Mark received: 
Answer to Example 5 
 
 
Mark receives at takeover:
The original Silver Ltd share cost of £12,000 is divided between the shares and cash received from 
Gold Ltd proportionate to the value received. 
As cash has now been received at the time of the takeover an immediate gain arises.
Capital gain in June 2021:
Disposal proceeds
35,000
Less Cost (W 1)
(10,000)
Capital gain
25,000
8,000 ordinary shares, valued at £5 =
40,000
4,000 preference shares, valued at £2 =
8,000
Total
48,000
The cost attributable to the ordinary shares is therefore: £12,000 x
40,000
= £10,000
48,000
Market 
value
Cost
8,000 Gold Ltd ordinary shares
40,000
10,000
Cash
8,000
2,000
Total
48,000
12,000
(Computed from working above)
£
Proceeds (cash received)
8,000
Less Cost
(2,000)
Capital gain
6,000

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Chapter 14
 
 
Answer to Example 1 
 
Daisy – Sale of business 
Business asset disposal relief is available on both disposals, the sale of the business and the sale of 
the shares where Daisy had owned at least 5% of the shares and been an employee for a period of 
at least 24 months.
Daisy has utilised £850,000 (£480,000 + £370,000) of business asset disposal relief in 2022/23 so 
has (£1,000,000 – £850,000) = £150,000 to utilise over the rest of her lifetime.
£
Goodwill
250,000
Factory
320,000
Warehouse
(90,000)
480,000
Sale of shares
Gain on shares
370,000
Net chargeable gains
850,000
Less AEA
(12,300)
Taxable gain
837,700
Capital Gains Tax £838,000 
×
10%
£83,770
Due
31/1/2024

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Answer to Example 2 
Anne 
 
– Capital Gains Calculation
Note 1
The AEA and the capital losses are applied against the gain on the sale of the painting as it will be 
taxed at a higher tax rate than the gain on the share disposal which is eligible for business asset 
disposal relief. Business asset disposal relief is available as Anne has held at least 5% of the shares 
and been an employee for the last 24 months.
Note 2 
Although £19,700 (£37,700 – £18,000) of Anne’s basic rate band is unused, this is deemed to be 
utilised by the gains qualifying for business asset disposal relief (even though the 10% tax rate was 
applicable to that gain) and therefore pushes all of the taxable gain on the painting into the 20% 
band.
There is a lifetime allowance of £550,000 (£1,000,000 – £450,000) remaining to utilise on future gains 
qualifying for business asset disposal relief.
BADR
£
Capital gains qualifying for business asset disposal relief:
Sale of shares
Proceeds
500,000
Cost
(50,000)
Capital gain
450,000
Capital gains not qualifying for business asset disposal relief:
Sale of painting
100,000
Less AEA(note 1)
(12,300)
87,700
Less Capital losses b/f
(25,000)
Taxable gain
62,700
Capital Gains Tax @ 10% / 20% (W1)
£45,000
£12,540
Due date
31/1/2024 31/1/2024
(W1)
£
£450,000 
×
10%
45,000
£62,700 
×
20% (Note 2)
12,540
Capital Gains Tax
57,540

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