Tx notes fa22 Final

(a)
What is the chargeable gain, if any, incurred by Richard? 
(b)
What is the base cost of the shares for Richard’s son? 
6.6.
 
Assets not wholly used for trading purposes 
(a)
Where only part of an asset is used for trading purposes, or where an asset has been used for 
only part of the donor’s period of ownership, then gift holdover relief is restricted.
(b)
Where the gift is shares and the individual owns at least 5% of the voting rights, then the 
capital gain on the shares eligible for relief is restricted by the following fraction:
Note
that this treatment is completely di
ff
erent to that which applies for business asset 
disposal relief. Remember that for business asset disposal relief purposes there is no question 
of apportionment. A company is either a trading company (and therefore qualifies for the 
business asset disposal relief) or it is not.
6.7.
 
Chargeable assets (CA) and chargeable business assets (CBA) 
(a)
An asset cannot be a chargeable asset where any profit that might arise on its disposal would 
not be a chargeable gain. This provision rules out current assets such as inventory (stock) and 
receivables (debtors) and exempt assets such as cash, motor cars and exempt chattels. This 
will include all chargeable assets held by the company, both those used in the business and 
those held as investments.
(b)
Chargeable business assets are those chargeable assets that are used for the purposes of a 
company’s trade (including goodwill purchased before 1/4/02, but excluding shares, securities 
and other assets held as investments).
Market value of company’s chargeable business assets (CBA)
Market value of company’s chargeable assets CA)

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